What is the benefit of having a Mortgage Pre-Approval when looking for a new home?
There is a difference between a Mortgage Pre-Qualification and a Mortgage Pre-Approval.
A mortgage pre-qualification is based on the information you verbally give to your loan officer to get a snapshot of how big a house you might afford and how much money you can afford to borrow to buy it.
A Mortgage Pre-Approval is an application file reviewed by an underwriter to be sure your income; assets and credit history qualify you to get the loan you are applying for.
Knowledge is Key: A Mortgage Pre-Approval gives you a firm idea of how much house you can afford. The underwriter bases this amount using a formula that compares your income to your total outstanding debt. The Debt:Income Ratio (DTI) is derived from the monthly payments that show up on your credit report and the income documents you surrendered as part of the process. This will keep you focused on the big picture and help to prevent being disappointed if you fall in love with a home that is too expensive.
Improve Your Negotiating Position: When a seller is comparing two offers and one of the buyers has Mortgage Pre-Approval there is a high confidence level that the deal will go through and close sooner. This may help you to win in a competitive bidding situation.
Confidence in Your Offer: Knowing that the key information in obtaining a mortgage has been reviewed by an underwriter will give you, and the seller, confidence that your offer is bona fide.
Keeping Your Spending On Track: Having detailed information on your interest rate, mortgage payment, closing costs and down payment requirements will help you stay within your monthly budget.
Time is Valuable: Knowing what you can and cannot afford can save you time and frustration in the house hunting process. This will help your Realtor find the perfect house in your price range.
Move in Quicker: Having Mortgage Pre-Approval will save you time when you submit your complete mortgage application for approval. Everything has been done beforehand. All you need is and inspection, appraisal and closing documents. The faster you close, the sooner you can begin to enjoy your new home.
If you are looking to buy a new home, a Mortgage Pre-Approval is the smartest way to get into your new home. Call Me at 860.945.9284 to discuss the right mortgage option for your family and to take advantage of my FREEJump Start Mortgage Pre-Approval service.