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Mortgage pre-approval is a big step that you can make toward success in your home buying process. You are at the point where you can decide if you are ready to take on the huge responsibility of a home loan. You can also have at your fingertips one of the best price negotiation tool possible in home buying – mortgage pre-approval! Having preapproval shows that not only that you are serious about a home, but that you will not have problems closing on your new home promptly. Mortgage pre approval is a huge advantage.
But, what is it and why is mortgage preapproval so important? Once you have found the mortgage lender that will handle your loan, you will make an application to them for a pre approval for your mortgage for the amount you expect to pay for a home. You will also provide personal information such as your income and past credit history. By showing the mortgage company that you have the means to pay a mortgage for a home, you will obtain a pre approval before or during your search for a home. Pre-approval helps you to know how much of a mortgage you will be able to obtain and you can prove to the seller that you can pay for the home.
Before you apply for pre approval of a mortgage, learn how much mortgage you can reasonably afford. Search the Internet until you locate a mortgage calculator which provides calculation, based on your income and expenses, the best mortgage amount for your lifestyle. These calculators are free to use and you should easily locate one that permits this type of “how much mortgage” calculation. Don’t try to obtain pre approval for a mortgage that is more than you can afford. It could become too tempting to try to “stretch” and buy the larger, more expensive home, only to learn that you can’t afford it while enjoying it. There is a huge difference between enjoying your new home and just squeaking by, stretching every dime to be able to make those payments for which you were pre approved.
Let us stress that before obtaining a mortgage pre-approval, you should compare several mortgage lenders to seek pre-approval from to find the best possible choice in a mortgage for you. There are many differences in mortgages and you need to find one that fits all your needs before you obtain mortgage pre approval. Some things to consider are the mortgage interest rate, the length of the mortgage, and the other terms that affect the overall cost of the mortgage such as pre payment penalties, early payoff penalties and more. By comparing several types of mortgages, you can be sure to find the right one that will save you money in the long run. From here, preapproval is simply the next step.
Remember that a loan is probably the biggest investment that you will make in your lifetime. That said, it is wise to ensure that you are on the right track from the very beginning. Having pre-approval from the start is then the next essential step.
Once you find the lending company that you will use, the next step is getting loan pre-approval. This is a simple first step that you will have to take in order to start looking for your home. Pre approval is like getting the green light to look for your new home because the mortgage company is telling you a few vital things. Most of us do not think we have financial limits, but truth be told, we can not all afford a hefty mortgage payment each month. Pre approval is also a good indication that the lending company is willing to take on your mortgage needs. It is wise to have pre approval before getting your hopes set on a home and finding out that you can not obtain mortgage approval for it.
In mortgage pre-approval, you will be asked to verify your income, your job history, and your credit worthiness. When you get the official mortgage pre approval letter, you will have the knowledge you need to start looking for the home of your dreams.
Sellers are more likely to negotiate a better price for someone who has preapproval since they can be sure the home loan will be approved. If there is a choice to sell the home to you at a few thousand less with pre approval than someone who has no pre approval, the seller may decide to go with a “sure thing”, the pre approval, rather than take the risk that the other party will end up failing to obtain approval for financing the loan. Please note that the mortgage lender may perform a more rigorous inspection of your assets, income, credit, and job history after you have selected a home and before funding, so pre-approval may not be 100% guaranteed.
Mortgage Equity Defined
Mortgage Payment Insurance
Mortgage Payment Options
The Mortgage Pre-Approval Process