When it comes to buying a home, mortgage pre-approval can be worthwhile. Getting pre-approved can help you find out if you will get a loan for your dream home. Getting mortgage pre-approval should be your first step.
Who has never felt excited about buying their first home? Raise your hand! It's normal to feel this way, especially if you already have the necessary down payment. If you have been or are currently in this phase, you have probably found yourself searching for a home through real estate agencies and real estate websites, and even visiting homes.
Although it is easy to get carried away by enthusiasm, it is important not to lose focus and to concentrate on what is most important in this first phase, namely, mortgage pre-approval.
Want to know why you should apply for mortgage pre-approval? Here are three reasons, and we suggest you contact a mortgage specialist to help you through this important phase:
1. It allows you to calculate the most appropriate loan amount for your situation
Pre-approval for a mortgage is a process whereby your financial profile is analyzed, including an analysis of your income, expenses, and mortgage affordability, establishing a loan amount for which you can obtain bank approval.
In other words, it is not enough to simply gather the necessary documentation and have a good down payment. Before approving the mortgage, the bank will have to analyze your profile, seeking to find out if you have financial stability, what your professional situation is, the debt-to-income ratio, and the percentage of financing it can grant according to your profile. After all, a mortgage represents a considerably higher risk for both you and the bank compared to a car loan or personal loan.
Let's suppose that you even have the necessary amount for the down payment on the house you want. If the bank determines that the most appropriate loan amount for your profile is less than the amount needed to make the deal, this may cause you to rethink your choice and end up opting for a lower-priced house. This is one of the main reasons why it is important to obtain pre-approval for a mortgage before choosing a house.
Another factor that justifies having a mortgage pre-approval is that owners and real estate agents always give preference to those who already have some guarantee of pre-approval.
2. It allows you to set a price range for your house search
By having pre-approval for a mortgage, you will not only have a more realistic price range, but you will also save time by avoiding searching for houses that are not within the price range that suits your situation.
It is worth remembering that banks currently finance a maximum of 90% of the purchase price, so by knowing in advance the purchase price range you can afford, you will also know how much you need for the down payment, and even understand how you can adjust your search in terms of location, square footage, type, and other characteristics of the property.
3. It speeds up the home buying process
By pre-approving your mortgage, you will be in a privileged position to get the home you have always wanted, because pre-approval ensures that the negotiation phase will be faster. If you have already taken care of the loan approval in advance, you can move forward with closing the deal more quickly, since you already know in advance the amount that can be approved by the bank.
Source: rankia.pt