06 Dec Obtaining Mortgage Pre-Approval
It can be intimidating getting into the mortgage pre-approval game – here’s how.
Obtaining mortgage pre-approval is an intimidating process, and typically it’s challenging to know what to expect before you jump in. Being pre-approved for a home mortgage loan tells sellers and realtors that you’re a serious buyer and gives your offers weight because they’re backed by your lender. Here are some tips and information to help you debunk the mortgage pre-approval process.
Choose Lenders to Interview
If obtaining mortgage pre-approvals is the first step in your homebuying process – as it typically should be – you may not have a realtor picked out to advise you. Jump online and do some research to determine which banks or credit unions have the best rates right now. If you do have a realtor, he or she should be able to assist you in determining this information. Choose the top two or three to interview. Do not have them run your credit for mortgage pre-approval prior to this interview. If you have a good feeling during the interview, then they may run your credit. This credit run will be a hard hit on your score, so you don’t want to have several run at the same time until you’re sure you’re in the right place.
Some questions you might consider asking during your interview:
- What feedback will be provided to me once you run my credit score?
- What recommendations will we discuss about money management?
- What types of loan options are available to me?
Once you choose a lender to run your credit and consider you for pre-approval, you should expect a lot of additional questions. This is because your credit score is only one portion of your pre-approval profile. Lenders are also interested in the areas you hope to buy, how much you intend to spend, your salary, your savings, and what percentage of the purchase price you will use as a down payment.
Determine What You Can AFFORD
Once you are pre-approved for your mortgage loan, your lender will give you your number – the amount that you are approved to spend on a home. But wait! It’s critical that you crunch your own numbers: salary, take-home pay, other expenses, and emergency savings, to determine what you can actually afford. This number may be lower than the one given to you by the lender.
You’re now one step closer to being a homeowner!