If you are ready to buy a new home, you can have a great advantage over other posible buyers if you have already been pre-approved for a home mortgage loan. The seller, eager to sell the home as soon as possible may put your bid in front of the other possiblepotential buyers Being pre-approved tells the seller of your credit ability and earnestness that you are ready and able to make an offer.
There is a procedure you need to go through to get loan pre-approval. You need to put together a full evaluation of your current financial situation. Begin by making a list of all your assets including your cash, savings, bonds, stocks, mutual funds, IRA's, carsand other valuable equipment. Then list out all of your debts. Be sure to include car loan balance, credit card balance, personal loans, student loans, etc. Also make note of all of your monthly obligations such as rent, car payments, credit card payments, other loan payments, utilities and phone, gasoline, etc. Using all of this information will give you a fair guide to how much you will be able to borrow and afford. Besides the monthly loan payment, remember there will be additional expenses associated with buying a home. With this financial information, you will be in a better position to begin the process of being pre-approved with a lender.
People often mistake pre-qualifying for a loan with pre-approval. Pre-qualifying means a loan officer has perused your information and without verifying it all, gives you an general idea of how much you will be able to borrow. Pre-approval, on the other hand, is a formal commitment from a lender once you have filled out an application for a home mortgage loan and your details have been verified.
Be sure to shop around for the best mortgage rate, APR, the best loan and terms that match your financial situation before you see a home seller. Then get that pre-approval commitment from the loan officer. It is not recommended to allow your real estate agent to act on your behalf as a mortgage loan officer too. The real estate agent should be focused on the property location and price you are seeking and not busy with the financing. Let a good, competent loan officer who has your best interests in mind deal with the financing end.
Get recommendations from family, friends, and co-workers on good, honest and efficient loan officers. Meet with at least two and study the details they are offering carefully. Ask questions and don't commit until you have a full understanding of the terms and conditions of your home loan.
To be pre-approved gives you an edge when shopping for a home. You learn to identify the price range in which you're looking to buy a home. It is easier for a home seller to accept your offer if you're bidding against a non pre-approved buyer because pre-approval will put you in a better negotiation position with the home seller by allowing you to move in quickly when you find the best house at the right price.
This information brought to you by
Cy-Fair Realtor.
