Why Getting Preapproved Is Important In The Mortgage Loan Process
When it comes to shopping for a new property, one of the most significant steps in the process is to get prequalified for a mortgage loan. Since the home loan industry is always changing loan guidelines, it is hard to know if you are qualified for a home loan without submitting an application. By getting preapproved for a home loan first, you are taking the guess work out of the equation.
Many Real Estate Agents want to know that their clients are qualified for a home loan before starting the house searching process. Some Realtors go as far as not working with any client who is not preapproved first. It is important for the future homeowner to know that getting preapproved first is the most significant step in the home purchasing process.
Why get preapproved now? For starters, completing a mortgage application will let you know where you stand now. If there is a credit issue, you still have time to correct the error. A preapproval will also let you know what down payment is required, what your monthly mortgage payment will be and the maximum sales price of a house you qualify for. These are important things to know when shopping for a house.
Credit Issues
Many customers do not know what items are on their credit report until it is too late. By completing a mortgage loan application first, if there is any negative or incorrect information on your credit report, you will have time to repair the mistake. Most credit repair companies take up to 45 days to correct inaccurate information. It can take up to 3 to 6 months to get all three bureaus to update with the revised information, so by starting the preapproval process first, if there is an error, you will have time to fix the problem.
Know Your Down Payment Requirement
A preapproval will let you know the required down payment to purchase a home. Since there are many different home loan programs from FHA home loans to conventional home loans with each requiring a different amount for a down payment, it is important to know how much money you will need for the house closing. This will also give you time to prepare for the closing by saving money for the down payment.
Know Your Monthly Home Loan Payment
Preapprovals also give you an idea of what your monthly home loan payment will be. This will help you set up a budget and prepare for the home payment. Also, a mortgage consultant can assist you with mortgage options that can affect the monthly payment.
Know What Your Can Buy
The most important part of the prequalification is knowing how much you can purchase a property for. You need to know what the maximum sales price of a home you qualify for. This way, you only are searching for houses that meet your budget.
Let The Seller Know You Are Serious
By getting preapproved for a home loan upfront, you are letting the seller know you are a serious buyer. If there are two offers to buy a house and one offer has a preapproval letter, the seller is most likely going to accept the offer with the preapproval letter. By being a preapproved buyer, you set yourself apart from those that wait until the final moments to get approved for a mortgage loan.
By talking with a home loan banker and getting preapproved today, you will have a better idea of where you stand in your house buying process.
David White is a Sr. Mortgage Consultant who helps clients with purchase home loans. David has over 12 years experience with mortgage loans and understands the loan industry.
categories: fha loans,conventional mortgages,home purchase,preapproval,prequalification,mortgages,loans,real estate,mortgage
