Are you thinking about buying a new house, condo or apartment? Whether you are upgrading, downsizing or investing, if you intend on borrowing the funds you'll need to be pre-approved for a mortgage.
In today's blog post we'll explore mortgage pre-approval and why this should be one of your first steps in buying a new home.
Pre-Approval Helps To Determine Your Budget
Do you know your budget? Mortgage lenders consider many factors when deciding how much they are willing to lend to a home buyer. While your employment status, salary, assets and credit rating are important, they are all pieces of a larger puzzle that help a lender to determine your risk. So regardless of how spotless your credit rating might be, you'll want to get pre-approved for a mortgage before trying to figure out your total purchase budget.
The size of your down payment will also be a factor in determining your overall budget. If you still have a bit of time before you're ready to buy a home, continue to put money aside for your down payment. The more you have, the less you'll need to borrow.
Once Pre-Approved You Are Ready To Make An Offer
Once you're pre-approved for your mortgage, you're ready to submit an offer for the home. Note that you do not need to bid high just because you are approved for a large mortgage. Work with your real estate agent to determine the right asking price for the home. Submitting a bid that's a bit lower than you're willing to pay leaves you with a bit of room in case the seller makes a counteroffer.
Many Sellers Will Demand Pre-Approval
Finally, don't forget that many sellers will require that you are pre-approved for mortgage financing before they'll accept a bid or offer. Many listings end up receiving multiple offers, especially those in hot real estate markets or popular communities. So if you table an offer without pre-approval, you may find that it is rejected in favor of another buyer who is ready to go.
Once you've been prequalified for mortgage financing, pre-approval is the final step in the process before you're ready to make an offer and purchase your new dream home. For more information about the pre-approval process, contact us today.