If you've never bought a home before, you are likely well aware of all there is to learn about the home buying process. This extends to how you are going to secure a loan to purchase your home, which can be handled by a mortgage broker to make things easier for you. While your broker will handle all of the work involved with finding you a lender, there are still a few things that you need to know about the mortgage pre-approval.
You Should Get a Mortgage Pre-Approval ASAP
A common mistake that many people make is not getting a mortgage pre-approval before they start browsing for homes. The problem that you may run into is stumbling across a home where you need to make an offer very fast. For example, the home you want may have just gone on the market and is generating a ton of interest, and you need to put an offer in that same day.
By having a mortgage pre-approval ready to go, you can let the buyer know that you are capable of securing a mortgage to purchase their home. This can put you ahead of other people that have made offers in a similar price range when things are very competitive. If you're not pre-approved for a loan, you'll be unable to submit your pre-approval letter with your offer to give you a better chance of winning the home.
You Should Request a Custom Pre-Approval Letter
One thing that you should do when you make an offer on a home is to request a pre-approval letter from your lender that matches the amount of money that you need to purchase the home. For example, if the home is selling for $300,000, you will want to show the seller a pre-approval letter that is for a home worth $300,000, even if your pre-approval is for a much higher amount. If you show the seller a pre-approval letter that is worth $400,000, they could potentially reject your offer and ask for more money because they know you are approved for a higher loan.
You Should Continue to Renew Your Mortgage Pre-Approval
A mortgage pre-approval is not going to last forever, since financial circumstances change and your lender wants to ensure that you are still allowed to borrow as much as they originally thought. That's why you want to continue to renew your mortgage pre-approval if you have not found a home by the time it expires. It's a simple process, and it will ensure that the document is up to date when you need it.
For more insight, contact services like Cornerstone Residential Mortgage.Share