As an agent, I would always recommend to my buyers that they do get pre-approved for a loan before they begin their search (note: pre-approval is different from pre-qualification. Pre-approval is a more formal process and carries more weight). For a little bit of work on your part, it benefits you, the buyer, in so many ways:
1) It will show you what price range is realistic for you, given your financial situation.
2) It shows you are serious, especially to sellers who may need to decide between offers from two or more potential buyers (the one who is pre-approved will likely have a greater chance of getting the house!).
3) Sometimes, it can make the closing process go faster. You are already pre-approved for a mortgage by a lending institution as long as your financial situation does not change drastically (this is not the case with a pre-qualification).
If you do get pre-approved, keep these things in mind:
1) Pre-approval letters generally expire after a set amount of time. If your letter has expired and you are still house hunting, you will need to get the letter updated.
2) Even though you are pre-approved you still need to have the property’s value approved by the lending institution before they will give you a loan. Hence, you will need to get an appraisal on the property. If the lending institution thinks you are paying more than the home is worth, they may not give you a loan for this property (even if you qualify for a loan of this amount).
3) Your pre-approval letter will specify the maximum amount for your loan. This doesn’t mean you should necessarily go this high with your loan. Consider all of your expenses and your comfort level with monthly payments before committing.
4) When making an offer on a house, you always want to include your pre-approval letter with your offer to show that you are a strong candidate to the seller. Tip: Have your lending institution adjust the letter to indicate the exact amount of the loan you will need with your offer. If you show the maximum amount of the loan you can get and this is higher than you are offering, the seller may hold out for a higher price from you.
Christine O’Day CT Classic Homes/Higgins Group
Christine@CTClassicHomes.comTips for Buying a Home
When you first set out on your house hunting mission, do you or your spouse fall in love when you find a charming house with an unexpected spectacular new kitchen in your low price range? Do you figure you’ll just make do with the 1 1/2 bathrooms when you really needed 2 1/2? Read on before you fall in love and submit an offer you’ll later regret.
Like everything in life, we all must make trade-offs but you certainly want to make sure that you are not sacrificing the big important things for smaller things that you can easily add later. To help you keep focused on your priorities, here’s what you should do before you begin your search: Continue reading “Beware of Love at First Sight.” »Tips for Buying a Home
As you begin your quest for your dream home, it may be a good idea to first draft a DreamPrint. So what’s a DreamPrint? It’s our way of helping you organize your thoughts, hopes and dreams so you can shop efficiently for the perfect property. We know that it’s not just about the number of bedrooms and bathrooms you’ll have, but also the way you live your life.
To help you uncover your needs and desires for life in your new home, we’ve included below some very important & insightful questions about the way you live. Think of our carefully designed DreamPrint as the blueprint to building your life in your new home.