Three Reasons Why You Should Get Pre-Approved Before Starting Your Search for a Home

If you are seriously considering buying a home, before you begin your search, consider first getting pre-approved by a lender. Many buyers say that they haven't even decided where to live yet, why get pre-approved? They believe that you find the home first, then apply for a mortgage. It's true that looking at homes is the fun part, and filling out a mortgage application is boring. But it has to be done, and ideally it should be done before you even speak to an agent. Here's why:

1. You'll know exactly how much home you can afford, and saves you from previewing homes outside of your price range.
2. Pre-approval puts you in a stronger negotiating position with the seller. In fact, some sellers require that a pre-approval accompany any offers.
3. Pre-approval helps you close quickly, because a lot of the paperwork is already done.

Pre-approval vs. Pre-qualification

Many buyers say that they've been pre-qualified over the phone or online. That means that they did not have to provide any documentation. If all of the information was provided truthfully, then this will give a buyer some idea of what they can afford. However, there are many factors that an anonymous website or lender won't take into consideration. For example, some communities have higher taxes than others, and this will significantly impact your monthy payment.

Pre-approval on the other hand requires a more rigorous process, including verification of your employment, credit scores, income, assets, and liabilities. Once the process is completed, the lender will provide a letter that you can give to your real estate agent if requested.

After you have found the home that you want and made an offer, be careful not to do anything that will change the status of your approval, and provide any requested documents in a timely manner. The lender will be working on your mortgage commitment after contracts are signed, and your rate may be locked only for a certain time period. From the time contracts are signed right up to the closing date, be careful not to do any of the following:

1. Don't make any large purchases on your credit cards.
2. Don't move money into your bank accounts.
3. Don't plan any trips around the closing date.
4. Do not apply for any credit cards or loans.

Using a local lender can insure personal and fast service and good communication. Continental Home Loans provides great service and advice.

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