Why You Should Get Pre-Approved Before House Hunting
Spring is approaching and with it, prime time for real estate transactions. Many people will be looking to purchase homes meaning home buying will become a “competitive sport”. This means that you will need to stand out to sellers if you want to “win” the house of your dreams. One way to show that you are serious about buying your dream home is to get pre-approved for a mortgage before starting your search. In fact, regardless of how competitive the market is, getting a mortgage pre-approval will give you the security of knowing what your true budget is, allowing you to know if a desired home is within your reach.
One of the many advantages of working with a local Realtor is that many have relationships with lenders who will be able to help you with this process. Once you have chosen a lender, you will need to fill out their loan application and provide them with vital information regarding your credit, debt, work history, down payment, and residential history.
There are “5 Cs” that aid in determining the amount you will be qualified to borrow:
- Capacity: Your current and future ability to make payments.
- Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash.
- Collateral: The home or type of home that you want to purchase.
- Character: Your history of paying bills and other debts on time.
- Conditions: Current interest rates and amount of principal influence the lender’s likelihood of financing the borrower.
Getting pre-approved not only shows sellers you are serious, but also speeds up the process of completing the purchase once your offer has been accepted.
Even before you contact a mortgage lender, it’s a good idea to look at your credit score to see where you stand.
Here are some steps you can take to improve your credit score:
- Check your report for errors. If you find errors, dispute them with the credit bureaus. Having errors removed can improve your score.
- If possible, pay down balances on credit cards.
- Resolve collection accounts. If you have any accounts past due, it will have a negative effect on your credit report.
- Open a secured credit card. If your score is low, this can be an effective way to raise it.
Purchasing a new home is exciting but can also be stressful. Getting pre-approved for a mortgage will help alleviate some of that stress. So, if you are in the market to buy a house this spring, contact mortgage lenders now and get the process started!
If you are in the market to buy or sell a home (or both), let me Sandra Nickel, and my Hat Team of Professionals assist you with all your real estate needs! Call us today at 334-834-1500 and check out https://www.homesforsaleinmontgomeryalabama.com for more information.
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