OK. You've made your choice. You're all set to buy a home. Great! You can see your dream house in your mind. Now you just need to find a real estate agent, make an offer, and move in. Right? Wrong.
Your first step should be to find someone you can trust to help you with your mortgage. But, you might say, that's not the fun part. Why should you start with a mortgage pro? In short, this can save you money, give you more bargaining power, and save you time.
Your mortgage broker will first be able to tell you if you are even eligible to buy a home. Second, if you want to buy a home, he or she can tell you how much house you can afford. Consider it. Do you and your real estate agent want to spend a month or two looking for your dream home, only to find it and find out that you can't afford it?! That is a lot of time, and time is money (or at least a lot of wasted weekends). Wouldn't it be better to know right away what you can and can't buy, focus on that, and feel like a winner? Of course.
Well, you might have thought of all of that already. Did you know, though, that if you're pre-approved, the seller of your dream home might treat you better? The seller has a life and a schedule just like everyone else. They want to make deals that will work. They don't want to put their house under contract only to have the deal fall through because the buyer can't qualify. So, let's say that you bid on a house and someone else bids the same amount at the same time. The other bidder has already been accepted, but you haven't. What offer should they take? Obvious. In another case, let's say you make a bid without being pre-approved and someone else makes a slightly lower bid but is pre-approved. What offer would you take?
One last thing to talk about is that there are different levels of pre-approvals. The first step might be called "pre-qualification," and it involves a mortgage professional taking your information (income, expenses, etc.), putting it all together, and telling you how much house you can qualify for based on the numbers you give. Another type of pre-approval is when a mortgage professional runs the loan through automated underwriting (this is where things get more technical) to get an approval, as long as all your information can be checked. The highest level would be to go through a lender to get the loan and do all the checks. Obviously, the higher level of pre-approval gives you more to stand on and gives you the most weight when bidding on a home. In any case, your mortgage expert should give you a letter that says how much you are pre-approved for.
Call that mortgage professional BEFORE you start looking for a house. This should be clear by now. And maybe, just maybe, the process could even be fun.
