"A Network That Works"
Do you have aspirations of home ownership? You may be crawling through websites like Zillow, Trulia & Realtor.com looking for your “dream home”. Ok, so maybe you’re not looking for your dream home. You could be realistically looking for what could be your first home. You may be searching out articles that teach you the steps to take that will get you to home ownership. Heck, that could be just how you found me!
Well, today, I want to talk about why I believe that it is never too soon to get a pre-approval. Not a pre-qualification, a pre-approval. There is a difference. Many times people want to wait until they “think” that they are ready, only to find out that they are miles from where they actually need to be for an actual approval. The only way to really know what you – specifically, need to do for an approval is to contact a mortgage professional.
Here are my 5 reasons you should get a pre-approval now:
1) You may find out that you are actually ready now!
Surprise! You’ve been working hard to pay your bills on time and you have been diligently paying those credit card balances down. You see a house on line and think, what the heck, let me just check! My friend, you qualify for this and this, that and that! It’s time to find an agent who can help you navigate from the pre-approval to the closing table. Set up your interview, & do your buyer consultation! Buying a house can be a long and somewhat challenging process at some points, choose REALTOR with care. You just found out that you’re approved, you can buy now or you can wait. At least you know that you have options!
2) You will receive a road map that will get you on course to buy later.
Here is a different scenario. You have no clue what it takes to buy a house but you still love looking at them on line and hold on to the dream that one day you could be out hunting for one too. One person may have told you that bad credit is better than no credit and another has said, no, no, no.… No credit is better than bad credit. You don’t know what is right so you do nothing.
A good mortgage professional will take the time to review your credit, and tell you what steps YOU need to take in order to begin building a strong credit profile. A really good lender will also walk the long loan road with you, re-evaluating your credit progress along the way. They should have a conversation with you about the importance of savings as well. Few and far between are the days of zero downpayment, so expect to bring one. You may be one of the surprised few that don’t, perhaps because of a gift or a down payment assistance program, but believe me, having the extra savings in your account will help your approval a lot!
3) You will find out how much money you need to save.
You have been thinking about buying for the last five years. You may even be the one who has received the great news of being ready now, but there’s one hiccup. The amount that you are approved to purchase requires a $3,000 down payment. Oh, my! If you had known this 5 years ago, you most certainly could have had this saved by now!
4) You will refine the parameters of your home search.
You have been looking and falling head over heels with these houses that are coming on the market. You are discovering what kind of landscaping you like or perhaps that you don’t want a yard at all! Your search parameters have consistently been, 4 bedrooms, 2 full bathrooms, full finished basement with a 2-car garage in so & so zip code. You consistently get 2-5 pages of homes that fit your search criteria.
Once you get pre-approved and find out at what price point you qualify to purchase, you plug the number into your search. Your search parameters provide you with ZERO search results. Ok, this must be a mistake. Maybe I typed something in wrong. Still, ZERO! Time to refine your search criteria! This is a point in the purchase process where you will discover that hiring a professional REALTOR truly helps you find more of what you are looking for!
5) Seller sees your due diligence.
These days, a seller is not going to take their house off the market because someone likes it. They are going to want proof of your ability to purchase. An even bigger challenge for today buyer is that in today’s market, inventory has been consistently low and sellers who are priced right are getting a lot more offers than they have in the recent past. Say, you are one of two buyers interested in the same home. You both have submitted an offer. You, on one hand, have your pre-approval letter attached to your offer while the other buyer “Will apply for financing within 5 business days”. Who’s offer would you accept? Exactly!
There are countless other benefits to an early loan pre-approval. One caveat is that a pre-approval does come with an expiration date and approval guidelines change often. What doesn’t change is the basic premise of low debt to income ratio’s, timely re-payment, and savings or assets. If you can keep these 3 basic things in good standing, I believe you are well on your way to a favorable pre-approval decision, but don’t take my word for it, call a mortgage professional!