Getting qualified before you apply for a loan will help you understand how much you can borrow.
The process of purchasing a home can be extremely overwhelming, especially when you walk down this path without the help of an expert. Knowing what steps to take or what to expect can alleviate the stress many first time home buyers endure. For this reason you want to place yourself in in the hands of a trusted lender. Working with a trusted and experienced lender will allow you to understand the process of buying a home and navigate through it smoothly.
When buying a home, you may be pre-qualified or pre-approved for a mortgage loan. These are not the same, in fact they are very different. You can easily be pre-qualified over the phone or on the Internet in just a few minutes. However, pre-qualification is not as powerful as a pre-approval. Obtaining a mortgage loan pre-approval requires a more rigorous process which includes verification of your credit, income, assets and liabilities. It is highly recommended that you be pre-approved for a mortgage loan before you start looking for a home.
Being pre-approved will:
- Inform you of your maximum affordable home value, and save you from previewing properties outside of your price range.
- Put you in a stronger negotiating position with the seller, because the seller will know your mortgage loan is pre-approved.
- Help you close quickly, since your mortgage loan is pre-approved.
Many let emotion guide their home buying process and quickly dive into setting up home showings with a realtor. Ultimately, this can really hinder your chances to purchase the home of your dreams. For example, let’s say you went to an open house and your heart is set on this being your dream home. Now you’re ready to make an offer, but you have not been pre-approved for your mortgage loan yet. Another home buyer also went to the open house who did get pre-approved and is also ready to put in an offer. Who do you think will most likely be home owner of your dream home?
You see failing to connect with your lender first and letting them guide you through the home buying process effectively can really cost you. Manage your time wisely and get pre-approved for a mortgage loan first before you start looking at houses.