You might think you’re ready to start looking for a new home right now. However, if you have not been pre-approved for a mortgage, you are skipping a vital step. For the majority of people, getting pre-approved is an essential first step when it comes to looking for homes. Most brokers will tell you the same thing, and there are great reasons for that. First, though, you should know how a pre-approval works.
Lenders do not simply pick a random number out of a hat to determine your pre-approval amount. Several factors go into figuring out this number. These factors include your income, assets, liabilities, and credit score and history. This information is typically fed into an underwriting engine, which determines your eligibility.
Now that you have been pre-approved, you can go into the home shopping process with greater ease and confidence. Knowing the amount the lender has pre-approved for you allows you to narrow down the massive number of options on the market into a smaller number of options that fit both your budget and your needs. Having confidence that you will be able to get approved for a given amount could mean that you can start looking at more expensive houses, or it could mean that you have to dial back your list of “wants,” when it comes to household features, depending on your situation.
The other advantage is that sellers often prioritize offers from people who have been pre-approved over offers from those who have not. This makes perfect sense: if someone without a pre-approved mortgage offer were to make an offer and go through the rest of the home buying steps only to find out that they could not get approved, the seller would have to relist their property and start all over again.
If you are ready to start looking for homes and need to get pre-approved, make sure to contact us today to find out what we can do for you.
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Rasha Ingratta & Mortgage Associates
By Mortgage Intelligence
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