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Preapproval for a Mortgage
Before you buy your first home, your Syracuse real estate agent will probably recommend that you take the time to get preapproved for a mortgage. Taking the time to narrow down lenders and get a definite highest amount that you can spend on a home can save you a lot of time and frustration down the road.
Once you know what you can spend on a home, you no longer have to waste time on homes you can’t afford. Instead of looking out homes outside of your price range, you can concentrate on the ones will be able to buy. This will save you a lot of energy and probably even speed up your search for a home. It also allows you to worry about something besides the price of a home when you’re looking at it, freeing you up to pay more attention to the finer points of the homes you look at.
Once you have found the perfect home, you can make an offer, confident that you have the financing to back it. Sellers will appreciate knowing that you have already been approved for a mortgage for the home; they won’t be put into the situation of trying to close the property only to have financing fall through at the last minute. If there are multiple offers, this could give your offer the edge it needs over the others. This will work in your favor even more if the sellers are hoping to close as soon as possible. Instead of closing after a month or more, it may only take a couple of weeks. Being preapproved for a mortgage also gives you a great bargaining position. Because sellers know that your financing is a sure thing, they may be more willing to work with you during the negotiation process.
It is important to know that being preapproved is considerably different than being prequalified. When you are preapproved, you’ve essentially gone through the entire mortgage approval process. The preapproval letter you’re given states that you will be getting a mortgage for up to a certain amount. This is usually only good for a limited amount of time, depending on the lender, but you should have plenty of time in which to find a home.
A prequalification letter is based on a much simpler process. The lender looks at briefly at your current financial status, and lets you know how much of a loan you could afford. This is not the same as what you will actually be getting for a mortgage, and it is non-binding. There is no promise implied in any of the letter. The loan amount, interest rate and terms will all be determined when you apply for the actual loan.
Views: 51Preapproval versus Prequalified when Buying
When you are buying a home especially for the first time, you may not know that much about loans. So it is a good idea to shop around, look up information and make sure you are getting the best possible deal for your money. It is also a good idea to look around for loans before looking for a home, so you know how much you can afford and will not have to worry about surprises later. Many people may not know the difference between being preapproved for a loan and prequalified. Here are some tips to show you the benefits and to help make things easier for you in the long run.
Ask your real estate agent for advice
Especially if you are a first time buyer, it is a good first step to ask your agent for advice when deciding on a loan. They have experience and may be able to offer some good options you may not have considered.
Getting preapproved has many benefits
Getting preapproved for a loan versus prequalified can save you time and allow you to look at homes that are best for you and within your loan budget. They can also help you to gain confidence, increase negotiating power and more.
Prequalified loans may take longer and not offer as many benefits
If you are only prequalified for a loan, it could take longer to get approved which means you could waste time looking at homes you may not be able to afford, the closing period may take longer, and more.
Prequalified loans may charge additional fees
Since you are not preapproved and you just may qualify for the loan, when you actually do get approved there may be additional fees charged for the whole process and it may waste your time and money.
Preapproved loans provide more security
If you are already preapproved for a loan, this offers you as a buyer a feeling of more security and safety. You will feel safer especially has a first time buyer looking at homes knowing you can afford a house you look at that may be your dream home.
If you are a first time buyer or even if it’s been a while since you have applied for a loan, these tips will help the process easier and better for everyone involved. This way you can search for that perfect home with fewer worries and just enjoy the bright new future ahead.
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