How a mortgage preapproval helps you in the home buying process

Buyers are often eager to get their home search started but here is why you need a mortgage preapproval before you start your home search.

• Most importantly you need to know how much home you can afford.  If you are searching for homes in the $600,000s and then find out you only qualify to buy a home up to $450,000 based on what you have for a down payment and can borrow, you might be disappointed in what that reduction in buying power means in terms of house size, features and location.
• Not all home loans are the same and depending on the loan type that best suites your financial picture and personal situation, there are different requirements and loan amounts you could qualify for.  It is best to speak to a mortgage professional to decide what is the best loan product for you and what those mean in terms of down payment requirements and monthly expenses.
• Getting a preapproval before you shop for a house gives you time to fix unexpected errors on your credit reports.  Those errors do happen, such as a bill that was paid that still shows up as a  delinquency, a credit card you didn’t open that is on your report or in my case, a credit card company reported my death to the credit reporting agencies.  That one was interesting to clear up!  Needless to say it took time.
• In a competitive market which we are currently in, at least in the Montclair area, you won’t be taken seriously making an offer on a house unless you have a preapproval included in the offer package.
• Because of the competitive market, the timelines are accelerated.  It is not uncommon for a house to come on the market or showings to begin Thursday or Friday and offers being due the following Tuesday afternoon.  If you have not already started the process to get preapproved, that can be very rushed to get all the paperwork in and also contemplate a strong offer.  This can create additional stress on an already stressful multiple bidding situation.
• Lastly, having the preapproval means that when you do find that dream home, the process can be accelerated because the lender has the majority of the paperwork needed to ultimately provide the mortgage commitment.  Some lenders even offer different levels of preapproval further simplifying the process of the loan application after the offer to purchase is accepted.

For more information or if you would like a referral to a mortgage broker, please contact me at http://www.urbansuburb.com.