It is easy to get swept up in the excitement of shopping for a new home, especially when it is your first. It is fun to tour open houses and get a feel for what is on the market that might feel like home. That being said, beginning to house hunt before you have gotten pre-approved with a mortgage lender may lead to disappointment.
You may think you know what you can afford, but factors such as your income, credit scores and credit play a role in determining how much home you can qualify for and afford. You don’t want to discover that after you have put in an offer on your “dream” home that you don’t qualify for the size of loan you need or that there are other complications related to your credit or other credit worthiness factors.
Mortgage Pre-Approval Before You Shop
When you get pre-approved for a mortgage through a mortgage lender, the lender does a complete financial review and provides you with the maximum price you can spend on your home. When you have this number in mind while house hunting, there are the following benefits:
- You can begin your house hunt with reasonable expectations based on what you can truly afford
- When submitting an offer on a home, you know exactly how much you can bid during the negotiations
Pre-Approval: Insurance When House Hunting
There are buyers that believe a pre-approval is only beneficial to make them more credible when making an offer. If the above teaches you anything it should be that getting pre-approved makes you more informed and reduces the stress of your house hunt and insures you aren’t using inaccurate figures when setting a home price that you believe you can qualify for and afford.
You have enough to focus you energy on, the last thing you need to worry about is getting your financing confirmed right before you make an offer on your home when there are other offers and your offer is time senstiive. Getting pre-approved is the first step you should take before house hunting.