The Importance of Mortgage Pre-Qualification

The Importance of Mortgage Pre-Qualification

 

So, you have decided it’s time buy your first house, or to scale up to a bigger house, or perhaps you have reached that time in life where downsizing makes sense. Whether you are a first-time home buyer or a seasoned pro, getting pre-approved for a mortgage is the smart thing to do for the following reasons: 

Check Please –

Your lending institution will need to run a check on your credit to find out how uniquely qualified you are to buy the home of your dreams. Checking your credit status is best to do before you start home shopping so you can discover any problems or surprises found in your credit report that you may have to clear up in order to close your deal. You can request your free annual credit report here: https://www.annualcreditreport.com/requestReport/landingPage.action

The Price Is Right –

By getting pre-qualified, you will have a good understanding of exactly how much house you can afford before you start looking. This can help you avoid the serious pitfalls of wasting your time by looking at houses beyond your means or by falling in love with a house that is out of your price range. You will be able to shop for a home with confidence within your pre-approved amount.

Lock It In –

You may be able to lock in the best rate by getting a pre-qualification before you buy thus saving you lots of money in interest over the lifetime of the mortgage loan.

Be In A Position To Jump On It –

One of the many challenges that 2020 has wrought is that it created a seller’s market because of a relative shortage of homes for sale. When the market favors the seller, you will want to be in the best position to have your offer noticed in case you 

 find yourself in a bidding war. Pre-qualification will help. Being pre-qualified lets the seller know that you are serious about buying, have your financing assured, and that you can be ready to move through closing quickly. These favorable conditions will give you an advantage over other buyers.

So how does Pre-Qualification work exactly?

First, you will make an appointment at your lender’s office with the mortgage specialist. You will need to bring financial documents with you including your income tax returns for the past two years, proof of income in the form of your two latest paystubs or bank deposit receipts and 3 months of your bank statements to show you have the funds needed for down-payment and closing costs. Your driver’s license and social security card will also be needed. The lending institution will pull your credit report and then discuss your options for purchasing your new home with you. More information or proof of current residence and income may be needed by your lending institution depending on your particular circumstance. Plan on spending about an hour with your mortgage specialist.

Relax and Enjoy the Experience-

Once you have your pre-qualification you are free to fully enjoy the home buying experience, with the confidence backed by your lending institution, and find the home of your dreams.

 

Each person’s financial situation is different and the information contained in this article is for general guidance. Please consult a mortgage professional to discuss your unique situation and determine the best option for you.

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