Do Not Make an Offer on a House Without Mortgage Pre-Approval
In today's housing market, making an offer on a house without mortgage pre-approval is like asking a woman to marry you without first meeting her parents. You need to make sure your ducks are in a row and you have the right blessings before you go in head first. It's true in marriages, and it's true in the home buying world.
So...what is pre-approval? It's what happens when a lender looks at your credit score, your income and your debt and tells you whether you'd qualify for a mortgage loan. All of these factors will help you figure out where to look for a house, and how much you should expect to spend.
Sellers and Realtors® love buyers with a mortgage pre-approval letter. This shows everyone that you're a serious, qualified buyer with the financing behind them so no one's time is wasted. If you don't know whether you can qualify for a home and make an offer, you're in danger of not being able to follow through on that offer.
Not only is it frustrating for all parties involved, it draws out the home buying process for others as well. If a seller is getting multiple offers but only one or two have been pre-approved, each potential buyer is waiting around to see if they're chosen. If each potential buyer the seller picks ends up not getting approved, the process just keeps going on and on. It's a bummer for all involved.
5 Reasons Not to Make an Offer on a House Without Mortgage Pre-Approval
- Embarrassment. Making an offer, only to find out you can't secure the financing is an embarrassing situation. Going to your real estate agent and the seller to tell them you can't actually afford the house is not a fun conversation.
- Frustration. House hunting with no idea on how much house you can afford is a recipe for disaster. You could find all kinds of homes you love in perfect communities, but if they're out of your price range then all that searching is done in vain.
- Focus. Talking to a mortgage consultant along with your real estate agent will help you narrow your focus into neighborhoods right for you and your budget. From property taxes and homeowners insurance to the schools and crime rates, focusing on the best areas for you makes the process run more smoothly.
- The first step is the first step. Trying to offer money you don't have for something you want sets you up for disappointment, frustration and more for yourself, your agent and the seller. Start with step one instead of putting the cart before the horse.
- Credit scores. Credit scores vary depending on who's pulling the report. Your score will differ if you pull it versus if a store pulls it, or when a car dealer looks at it over a mortgage consultant. The credit bureaus report a little differently, and each of the 3 main bureaus will differ from each other. So pulling your own credit, or having it pulled recently for a car loan will not help ensure that you're in the clear to buy a house. Mortgage pre-approval will help make sure your credit score is mortgage-ready.
"What do I have to do to get pre-approved for a mortgage loan?"
Common documents for pre-approval could include recent pay stubs showing your income, your credit report (your mortgage consultant will handle that), W-2 forms, 1099 forms if you own your own business and banks statements. The more detailed your pre-approval process is, the more quickly final approval can happen.
Time to get pre-approved for a mortgage? Click the button below.
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