Buying a home is one of the biggest, if not the biggest, financial commitment you’ll make in a lifetime. In addition to the financial impact of buying a home, your home is likely to shape a good part of your life – it will generally help determine what schools and school districts your kids attend, its location and potential commutes may impact where you decide to work and the hours you keep and more. In order to get yourself in the best position to move quickly on your dream home once you find it, we strongly recommend getting preapproved for a mortgage before you start looking. Preapproval means that a lender has looked at your credit profile, your income and assets and determined that they are comfortable extending you a mortgage loan. This saves you from the worry that once you find your perfect home you won’t qualify for a mortgage in order to purchase it.
We’ve compiled our top 3 reasons why you should get preapproved for a mortgage below:
Getting preapproved means you’ll know what you can afford
You have probably thought about your budget and how much you can comfortably spend on a mortgage each month. In addition to your own calculations, lenders will be able to tell you how much money they will be able to extend to you, based on factors such as your income, debt load, other assets, credit score and credit history. Getting preapproved by a lender will quickly inform you of what your general budget is, and what your house-hunting financial ceiling is. That will save you time and potential heartache from looking at properties with sale prices your lender won’t approve you for.
Getting preapproved shows a seller that you are serious
Many sellers these days won’t entertain offers from prospective buyers who have not been pre-approved, so save yourself a headache and get pre-approved before you start looking! A pre-approval letter from a mortgage lender tells home sellers that you are a serious buyer and it gives you the peace of mind knowing that you will be able to secure a mortgage on the home of your dreams once you find it.
Getting preapproved can save you time, getting you into your new home quickly
The mortgage process can be lengthy and time-heavy. Credit checks take time, and it can take you time to compile all the necessary paperwork such as your old tax returns and paystubs. Income verifications and other financial verifications can take time. When you get preapproved however, most of that legwork is done upfront, meaning that when you find the right home to buy, you’ll be in a position to move quickly to the sale of the property. Getting into your new home fast may save you money too, especially if you are currently renting on a monthly basis and could be into your new home and save a month’s rent!