Mortgage pre-approval could help you get the home of your dreams.
- Mortgage pre-approval requires you to provide financial details to lenders.
- You’ll get pre-approved to borrow a certain amount at a specific interest rate.
- Pre-approval can help with the home-buying process.
If you are considering buying a home, you should get mortgage pre-approval first. This involves providing financial credentials to a lender. The lender will review your details and let you know if you’re approved, how much you can borrow, and what rate you’ll be offered. You’ll typically have the chance to lock in your rate for a set period of time. And you’ll be given a pre-approval letter.
Pre-approval doesn’t guarantee you a loan; things can still change. And the process of getting mortgage pre-approval can take time and seem like a hassle. But there are three reasons why it’s important to go through with it. Here’s what they are.
Mortgage pre-approval gives you the opportunity to see how much money a lender will let you borrow based on your specific financial situation. By finding out the maximum amount you’re allowed to borrow, you won’t waste time looking at homes that are too expensive for you.
Remember, though, you do not have to borrow the full amount your mortgage lender allows. You’ll want to look at the costs of the loan you’ve been pre-approved for to make sure the monthly payments fit in your budget and you’re comfortable with the total interest you’ll pay over time.
You may decide you want to borrow less than you’ve been approved for, and that could be a smarter financial move in some circumstances. But pre-approval can still help you figure this out by giving you insight into what a loan could cost you.
2. You’ll be well-prepared to make an offer
Most of the time, when you make an offer on a home, the sellers want you to include a pre-approval letter. This gives them peace of mind because they know a bank has evaluated your financial credentials and you’re likely to be approved for the home loan if they accept your offer.
In today’s competitive real estate market, you’ll likely need to be ready to make an offer quickly if you see a home you like. And you don’t want to miss out on a house you love because the sellers require a pre-approval letter that you …….