Buying a home is possibly one of the most important financial decisions of your life. However, before you start shopping for your dream house; a few considerations can make the process a lot smoother. Getting started on a pre-approved mortgage process is one.
Pre-Approved Mortgage
A pre-approved mortgage is a loan that is sanctioned by the lender after determining the eligibility of the borrower. The amount that you are eligible for will be decided based on your income, employment history, credit score, age, and repayment capacity. Getting pre-approved means that you are more likely to
secure financing for your house, provided your financial status remains the same. It should be noted that pre-approval doesn’t guarantee a loan; just that your chances of securing one increase.
Let’s find out how getting a pre-approved loan should be the first thing in your home-buying process.
- You’ll know how much your loan will cost
- Much before you decide on a particular property to buy, you should spend some time researching different mortgage lenders, their interest rates, and other loan terms. This shall give you ample time to decide on the best-suited loan for you. And once you are sure of the interest rate you qualify for, you can work around a budget to service the mortgage. You are also better equipped to tweak your other expenditures to take care of the mortgage payments. This way, there will be no financial surprises to catch you off guard.
- You’ll know the budget for your house
- During the pre-approval process, the lenders inform you of the loan amount you are eligible for. The upper limit of this loan amount can help you decide the price range of the houses you short-list and buy. And this, in turn, eliminates the properties that aren’t affordable to you.
- You’ll have a better chance of getting an offer accepted
- Most sellers entertain only those offers that come with proof that you can afford the property. When you submit an offer with a pre-approval letter, you come across as a well-qualified buyer. It is an indication of you being a genuinely interested party who can get a home loan.
Investing some time to get a pre-approved mortgage can significantly ease up the home-buying process and experience. It prevents you from wasting your time looking at houses that don’t fit your budget or losing out on a great offer when the requisite pre-approval takes time.