conventional mortgages

Advantages To Getting Preapproved For A Mortgage Loan

When it comes to purchasing a new property, one of the most significant steps in the process is to get preapproved for a mortgage loan. Since the mortgage industry is constantly changing mortgage guidelines, it is difficult to know if you are approved for a mortgage loan without completing an application. By getting preapproved for a mortgage loan first, you are taking the guess work out of the equation.

Many Realtors want to know that their clients are preapproved for a home loan before starting the house hunting process. Some Realtors go as far as not working with anyone who is not preapproved first. It is crucial for the future homeowner to know that getting preapproved first is the most significant step in the house buying process.

Why get preapproved now? For starters, completing a mortgage application will let you know where you stand now. If there is a credit issue, you still have time to correct the mistake. A preapproval will also let you know what down payment is needed, what your monthly mortgage payment will be and the maximum sales price of a house you qualify for. These are important things to know when shopping for a home.

Credit Issues

Most customers do not know what items are on their credit report until it is too late. By submitting a loan application first, if there is any negative or incorrect information on your credit report, you will have time to repair the mistake. Most credit repair companies take up to 45 days to correct inaccurate information. It can take up to 3 to 6 months to get all three bureaus to update with the accurate information, so by starting the preapproval process first, if there is a mistake, you will have time to fix the problem.

Know Your Down Payment Requirement

A preapproval will let you know how much of a down payment is required to buy a home. Since there are several different loan programs from FHA home loans to conventional home loans with each requiring a different amount for a down payment, it is crucial to know how much money you will need for the house closing. This will also give you time to prepare for the closing by saving money for the down payment.

Know Your Monthly Home Loan Payment

Preapprovals also give you an idea of what your monthly loan payment will be. This will help you set up a budget and prepare for the house payment. Also, a loan consultant can assist you with mortgage options that can affect the monthly payment.

Know What Your Can Purchase

The most important part of the prequalification is knowing how much you can purchase a home for. You need to know what the maximum sales price of a house you qualify for. This way, you only are looking for homes that you can afford.

Let The Seller Know You Are Serious

By getting preapproved for a mortgage loan first, you are letting the seller know you are a serious buyer. If there are two offers to buy a house and one offer has a preapproval letter, the seller is more than likely going to accept the offer with the preapproval letter. By being a prequalified buyer, you set yourself apart from those that wait until the final moments to get approved for a home loan.

By talking with a loan banker and getting preapproved today, you will have a better understanding of where you stand in your house buying process.

David White is a Sr. Mortgage Officer who helps customers with purchase home loans. David has over twelve years experience with mortgage loans and understands the loan industry. Also published at Advantages To Getting Preapproved For A Mortgage Loan.