Are You Already Approved For A Loan?
If your quest to become a homeowner has taken on a new urgency, you must be prepared to deal with the financing issues. Most people will need to procure a mortgage loan, so the first step is to get pre-approved. A pre-approval can help you know without a shadow of a doubt that
- You can search for single family homes for sale within a more defined price range.
- Once you find the home you want, you will (almost) certainly get the loan you need.
There are very few drawbacks to taking the step of getting pre-approved for a mortgage but being prepared is all-important. Read on for what you need to know about home loan pre-approvals.
Do You Really Need to Get Approved?
The pre-approval step did not exist in the past. No pre-approval meant a more simple loan process, but it also resulted in plenty of disappointed applicants and irritated sellers. A pre-approval grants you more certainty that your loan will be approved once you find a home. Likewise, it assures sellers of both your seriousness and your ability to get a loan. All that being said, pre-approvals should come with some caveats
Understand What a Pre-approval Means and What It Does Not
Expecting too much from a loan pre-approval can lead to buyers to make fatal mistakes. Keep the following in mind:
- Your pre-approval may or may not come with a mortgage interest rate lock. Your interest rate can make or break a deal. An interest rate that is even a few points higher might prevent you from qualifying for the home you want at a price you can afford. In most cases, your lender won't allow you to lock in a rate until you have a specific home in mind and the seller has accepted your offer to purchase.
- Your pre-approval might not matter if the home you want is appraised for a lower amount than the loan amount. You might need to head back to the bargaining table and get the seller to lower the price.
- Your pre-approval may not guarantee you a loan. Your pre-approval is based on a few different financial, employment, and income factors. If any one of those areas undergoes a change, your ability to be approved for a loan could be put in jeopardy.
Your real estate agent is happy to recommend lenders who are trustworthy, efficient, and easy to work with. Speak to your agent today and get into the home of your dreams.
