Why Getting Pre-Qualified for a Mortgage is Necessary
Buying a new home can be one of the most exciting times in your life.
When you make the decision to buy in the Finger Lakes region of New York and you have saved money for a down payment, your first impulse may be to go out and look at houses. But keep your excitement in check!
Unless you have the entire amount for a cash deal, you will need a mortgage. It is a good idea to get pre-qualified for a mortgage before you go house hunting, for many reasons. In the long run, the time you spend getting pre-qualified can make your homebuying experience smooth and hassle free.
What Does it Mean to Be Pre-Qualified?
When a lender gives you a pre-qualification for a mortgage, they are giving you an estimate of the loan amount you are likely to receive. It is important to note that a pre-qualification is not a guarantee that you will be granted a mortgage. But it does give you - and the seller - an idea of how much you might receive for a mortgage when you buy a house.
This is how it works. You give the bank inform about your credit score, your monthly debt payments and other details, and if the bank likes what it sees you will get a pre-qualification.
Pre-Qualification vs Pre-Approval
Pre-qualification is not the same as pre-approval. To get a pre-approval for a mortgage, your lender will conduct an in-depth analysis of your finances. When you are pre-approved for a mortgage, you will receive a hard number for your mortgage loan amount.
Keep in mind that a pre-approval is still not a guarantee of getting a mortgage. Even with pre-approval, you will still have to go through the underwriting process.
Advantages of Getting Pre-Qualified
There are many advantages to going through the process of getting pre-qualified before you look for a new home. Here are some of the main reasons:
- You Can Narrow Down your Homebuying Budget
Your pre-qualification will give you an idea of how much money the bank is likely to give you when you apply for a mortgage. That way when you look for your dream home you will conduct your search based on homes you can afford and you won’t waste time looking at houses like the large estate home in the next town when it is out of your budget.
- Real Estate Agents Are Happy to Work with You
When you get a pre-approval from your lender you are showing your real estate agent that you are serious about buying a house. Your agent will then be willing to put in the time to help you find the perfect home.
- It Shows the Seller You Are a Serious Buyer
Sometimes lookers show interest in a home without really doing the math and making an informed decision. When you get a formal pre-approval from the bank you demonstrate that you are determined to buy and you are already thinking ahead about financing.
- Sellers May Favor You Over Other Buyers
Your pre-qualification letter can make your offer to buy a home more attractive to sellers. When you are pre-qualified it can give you an edge over other interested buyers who are not pre-qualified. Your pre-qualification demonstrates that you have already contacted a lender and that you are willing to do the work to show that you can afford to buy the house.
- You May Get Your Under Asking Price Accepted
Your pre-qualification letter is a definite plus when sellers are considering other offers. In fact, sellers may be so impressed that you have taken this step that they may be willing to accept your offer, even if it is under the asking price.
- A Pre-Qualification Gives You a Head Start on Getting a Mortgage
Providing information necessary for a pre-qualification can save time in the mortgage application process when you find the home of your dreams. You have probably already filled out paperwork the lender will need to move forward with the mortgage loan. If you are eager to move quickly, getting pre-qualified is an important first step in the mortgage process.
- You Can Correct Your Credit Score
A pre-qualification can reveal errors in your credit report and other documents before you actually apply for a mortgage. This will give you an opportunity to make corrections before your offer is accepted.
- You Will Be Able to Plan Your Expenses
Arriving at a price range for your new home can help you manage costs associated with buying a home, like moving expenses and closing costs.
Tips for Getting Pre-Qualified
Your mortgage pre-qualification is an important tool when you negotiate a price with the seller and when you compete with other interested buyers. Getting pre-qualified for a mortgage is especially important for people who are self-employed because it shows that the bank has looked over your information.
When you decide to buy a new home, check your credit score a few months ahead of time so you can get your finances in order, correct mistakes and present your offer to buy in the best light. When you are ready to look at houses on the market, get your pre-qualification just a couple of months before your search so it doesn’t expire.
Use Your Pre-Qualification to Your Best Advantage
When you are ready to buy the home of your dreams in New York’s beautiful Finger Lake region, count on professional real estate agent Kelli Ide to help you make smart decisions like getting a pre-approval from your lender.
Kelli Ide offers a unique, concierge-style approach to real estate, including staging, photo styling and market preparation services exclusively for clients to give them an edge over the competition. For further information about buying or selling a home, visit kelliide.com.
CONTACT ME FOR A CONFIDENTIAL CONVERSATION TODAY!
