Buying a home is undoubtedly one of the most exciting events in a person's life, so it's important to go about it in the right way. Being prepared and getting pre-approved for a mortgage before you even start looking is a very good idea. It is probably the most important thing you can do if you are a Chicago first time home buyer.
Imagine the advantages you will enjoy simply by being in the driver's seat. Without pre-approval embarking on this journey is rather like plunging into uncharted waters without a life jacket.
However, here's a word of caution. If you have procured something called pre-qualification from a bank or lending institution, you should stop and take note, because being qualified is very different from being approved.
Pre-qualification is relatively easy and you can do it online or simply by chatting on the phone with a mortgage representative from a bank or lending institution. In a friendly and informal way you feed information to the official about how much you earn, your assets, and what you owe. The numbers are crunched, and up comes a figure showing how much mortgage you can afford.
This amount is just a guide, and in no way gives you a bag of money to go shopping with. It's simply a preliminary step down the mortgage path. The next step is pre-approval, which is what you need to continue your quest for home ownership.
Pre-approval requires a special mortgage application form to be filled out, usually along with an appropriate fee. It is at this point that the financial institution will conduct a thorough look at your financial situation including a credit check.
When this comes back positively you will receive the official word on the exact amount you have qualified for, along with the interest rate you will be charged. Often the interest rate can be set at this point, so will really have a handle on your costs.
It is with this document that you can confidently go shopping for your home, knowing the price ceiling that you have been granted. You can zero in on properties that you can get serious about. Properties that you can now realistically dream about living in.
You and your realtor will have an advantage when you find yourself in competition with other potential buyers. Being pre-approved will sound very sweet to the seller and may very well tip the scales in your favor.
When your offer has been accepted, an appraisal of the property should be obtained. Then, when everything is in order, such as a title search and one last check of your credit worthiness, the bank will issue a loan commitment. This is the final piece that will seal the deal.
So remember, be pro-active and get pre-qualified first. This will get the process going. Then proceed with your pre-approved application. In no time you'll be a happy in your new home.
Nick Messe is president of Lead Frog LLC. If you are a
Chicago first time home buyer you need mortgage advice you can count on. Call 773-305-LOAN for a free quotation without obligation on a Chicago 1st time home buyer mortgage or mortgage refinance - http://www.aandnmortgage.com
