So you think you are ready to buy a home and maybe this is your FIRST home? GREAT! Let’s get you pre-approved first! Here’s why:
In order to completely protect you, the buyer, I need to have a pre-approval letter. A local lender is preferred. (We can make some referrals for you). However, if that is not possible, you can search online for a lender. Have them review your credit, income and assets. If you are meeting face to face, the lender will ask you to bring information with you to support the information you tell them. They will then give you an idea of what price range you should be looking at and what your max is. It is important to know what that max equates to in a mortgage payment. This should be a monthly amount you are comfortable with. That monthly payment will include your principal, interest, property taxes and estimated homeowners insurance.
Then the lender will tell you to go shopping for your new home! When we do find your home, you will call them back and they will give you a letter saying that you are pre-approved for that specific home. Then they will run the numbers again and estimate the principal, interest, taxes and homeowner’s insurance. That will tell you approximately what your total monthly payment will be. After you receive the letter, you give that letter to your REALTOR® and they will help you write an offer on your new home!
Why Not a Pre-Qualification?
A pre-approval letter is considered better than a pre-qualification letter when buying a home for several reasons:
Verification of creditworthiness: Pre-approval involves a thorough credit check and verification of financial documents, giving lenders a clearer picture of your creditworthiness. Pre-qualification is often based on a brief, informal assessment.
Specific loan amount: Pre-approval provides a specific loan amount, interest rate, and terms, giving you a clear understanding of your budget. Pre-qualification typically provides a rough estimate.
Seller confidence: A pre-approval letter carries more weight with sellers, as it demonstrates your financial credibility and ability to secure financing.
Negotiating power: With a pre-approval letter, you have more negotiating power, as sellers know you’re a serious buyer with secured financing.
Time-saving: Pre-approval streamlines the mortgage process, saving time during the actual home purchase.
Identifies potential issues: Pre-approval helps identify potential credit or financial issues early on, allowing you to address them before making an offer.
In summary, a pre-approval letter provides a more detailed and verified assessment of your financial situation, giving you a stronger position when buying a home.
