Before meeting with a Realtor, it is very important to have buyers pre-approved for a mortgage. A pre-approval will identify your buyer's price range, uncover any potential weaknesses, discover any special Grants they may qualify for and clarify which mortgages options are in their best interest. Each mortgage product varies from the amount of money needed down to the acceptable debt-to-income ratios and it is important to know these factors upfront.
What is a Pre-Approval ?
A mortgage pre-approval is a written commitment identifying the mortgage amount you qualify for. Part of the mortgage pre-approval process is to obtain bank statements, tax returns for the past two years, calculate annual income, and pull a credit report to confirm you meet the Lender’s credit criteria.
When Should I Get Pre-Approved For A Mortgage?
The answer to when you should get pre-approved for mortgage is simple. Complete this before you contact a Realtor and begin looking at houses. Below are a few key reasons you will be glad you obtained a pre-approval before looking at houses.
Correct inaccuracies on your Credit Report
Did you know there are over 50 credit score models and they are all different? Don’t rely on the credit score you received from a credit card company, department store or even from a recent car purchase. The most common problem we encounter when we pull a credit report is the consumer has no knowledge of a particular item or the payments or amounts owed are reported incorrectly. Each lender has minimum credit score requirements for every one of their loan products. So many activities impact your credit score and while you are looking for houses with a Realtor we can help you improve your credit score by fixing any errors or inaccuracies. It can sometimes take a couple of months for it to get corrected on your report and for your score to be readjusted. This can happen seamlessly at the same time you are shopping for your home.
Eliminate Disappointment
Most Realtors will require a pre-approval before even showing you potential properties, but unfortunately some real estate agents will show you houses with no clue whether you can afford a home or not. Top Realtors will strongly agree this is a disservice to you. Why is this a disservice? The fact of the matter is, you could “fall in love” with a home, submit a purchase offer, and find out once they speak with a mortgage lender you cannot finance that home due to credit problems or because of other reasons. Being in this situation can understandably leave a buyer upset, heartbroken, and disappointed. Moreover, you could even lose the Deposit you made on the sales contract! We work with many professional, reputable Realtors and will gladly introduce you on request.
Understand All Of The Costs To Buying A Home
There are substantial closing costs when buying a home. It’s not as simple as a 3% to 30% down payment. By getting a pre-approval, you will have a very strong understanding what costs to expect when buying a home.
A Mortgage Professional will help you identify the following:
- Total Loan Amount you qualify for
- Closing Costs and how to get the Seller to pay your Closing Costs!
- Where to find Free Grant Money for the Downpayment
- How to properly document a gift for the Downpayment
- How much you personally need to save
