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Are you thinking of buying a home? If so, your best bet is to start the process by getting pre-approved for a mortgage.
One thing you can do right now is get pre-approved for a mortgage. If you’re wondering why pre-approval is a great step to take today, here are a few key reasons:
When it comes time to buy a home, you’ll want to put your best foot forward. And part of that process involves getting your finances in order and ensuring that you’re able to financially support a home purchase before you put in an offer.
Sellers want to make sure that the buyers they’re dealing with are able to secure financing. The last thing they want is to spend time negotiating with a buyer and agreeing to their offer, only for the deal to fall through because the buyer isn’t financially capable of getting approved for a mortgage.
Rather than going into the process blind, getting pre-approved for a mortgage can not only tell you what you can afford in a home purchase, but will also show sellers that you’ve got the means to follow through with a real estate deal.
This is especially helpful in a competitive real estate market when there are plenty of other buyers out there vying for the same property that you are. In a multiple offer situation, sellers will focus only on buyers who have shown that they’re able to get approved for financing rather than trisk dealing with buyers who have not shown their financial strength.
If you go into an offer situation armed with a pre-approval letter, you’ll be showing the sellers that you’re a serious buyer. Sellers only want to deal with buyers who are serious about buying rather than wasting time with “tire kickers” who haven’t taken the time to get prepared for purchasing a home.
By getting pre-approved, you will have a leg up on the process. That way, the final mortgage approval process can happen quicker since the lender already has much of the information needed to assess your ability to secure a mortgage to buy a home.
When you’re in the market to buy a home, you’ll want to find out exactly how much you can afford, and getting pre-approved for a mortgage will tell you how much of a loan you’ll likely be approved for based on your current financial status.
Your lender will look at a few things, including your credit score, and your income versus your debt. Once you find a home you want to put an offer on, you can apply for final mortgage approval based on the purchase price of the home.
It’s important to keep in mind that as much as getting pre-approved for a mortgage is helpful before you start searching for a new home, it doesn’t necessarily mean that you are guaranteed to get approved once you finally put in an offer on a home that’s accepted.
Once your offer is accepted by the seller, it’s considered to be contingent on your ability to secure financing, as long as you’ve made sure to include this contingency, which allows you some time to get final approval for your lender.
At this point, your lender will want to see the offer agreement, which will detail the price you agreed to pay for the property. As long as the home is appraised at or above the purchase price and nothing has changed in regards to your financial and credit profile, final approval will likely be granted.
But there may be instances that could hinder final approval, even after you’ve been pre-approved for a home loan. For instance, if the home is appraised at a value less than the purchase price, you may not be able to get the entire loan amount you need to finance the purchase.
Or, something in your financial life may have changed that will require the lender to re-evaluate your ability to secure a loan. For instance, perhaps you changed jobs, took a pay cut, or added more debt to your load. Any one of these things will change your financial profile and will require the lender to take a look at all your documentation again to determine whether or not you can still get the mortgage needed.
That’s why it’s so important not to make any changes to your employment status or apply for any other loans or credit products before final mortgage approval.
In addition, it should be noted that a pre-approval letter does not last forever. Generally speaking, your pre-approval will expire anywhere from 60 to 120 days after you are pre-approved. If you wait until after this time frame to seal a deal on a home, your lender may require that the process of mortgage approval start over.
Let’s connect so that you are ready to complete the rest of your home search!
Are you ready to get pre-approved for a mortgage or apply for a home loan to buy a home? If so, we’d love to help. Sammamish Mortgage has been in the business since 1992 and helps borrowers in Washington, Idaho, Colorado, and Oregon secure one of many mortgage programs, and we’d love the opportunity to help you too. Call Sammamish Mortgage today!
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