3 Reasons to Get Pre-Approved for a Mortgage Before You Start Shopping for a Home
There are many benefits to getting pre-approved for a home loan.
If you're thinking about buying a home soon, you should start shopping around early with different mortgage lenders so you can find the best loan for you. You're also going to want to get pre-approved.
When you get pre-approved, you give a lender your financial details, and the lender reviews them to determine if you'll likely qualify for a home loan. While pre-approval isn't an ironclad guarantee that you'll get your loan, it does mean you're more likely to secure financing, provided your circumstances don't change.
It can take time and effort to get pre-approved for a mortgage, but it's worth doing before you start going to open houses or scheduling home showings. Let's look at three big reasons why you should get pre-approved before beginning the home-buying process.
1. You'll know how much your loan will cost
When you get pre-approved, your lender typically tells you what loan interest rate you can qualify for. Depending on your circumstances, you may actually be able to lock in that rate so you'll know exactly what you'll pay for your home loan.
If you know up front how expensive your mortgage loan is going to be, then there will be no surprises when it comes time to actually purchase your home. You can make absolutely sure that the amount you're planning to borrow will fit into your budget. And you can assess whether the total costs you'll pay for your home over time are worth it.
2. You'll know what your home price range is
During the pre-approval process, lenders also tell you what amount you're allowed to borrow. While there are plenty of reasons why you shouldn't max out your budget when buying a home, it makes sense to get an idea of what your upper limit is.
That way, you won't waste time trying to figure out if a home is out of your budget -- and you won't fall in love with a house that you can't possibly afford.
3. You'll have a better chance of getting an offer accepted
When you find a home you love, you want to have the best chance possible of your offer being accepted by the seller. That means you want to come across as a well-qualified borrower who can get a home loan and follow through with the purchase.
Most sellers won't entertain offers without proof you can afford the property. This includes obtaining a pre-approval from a mortgage lender. Since it can take time to get pre-approved, you'll want to have your pre-approval letter ready to go when you find a house you love. If the seller requires pre-approval, you could miss out on the property if another buyer submits an offer with a guarantee from a mortgage lender before you even get your pre-approval in hand.
By doing the work up front to get pre-approved, you'll make your life a lot easier during the home-buying process. You won't waste your time, fall in love with a home that's out of your price range, or miss out on your perfect property because you haven't lined up your loan.
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