Importance of Being Pre-Approved By Your Mortgage Lender Before Shopping for a Home
The housing market here in Colorado Springs, Denver, and Castle Rock is different than in past years. There are not many as many homes available to buy. So when a house becomes available on the market, there can be much higher interest in that home, and it is common for several offers to be put on that home within the first day or two.
Pre-Approval Letter with Contract
When potential buyers put in the offer, the seller’s real estate agent is requesting that it is accompanied by a pre-approval letter from a mortgage lender showing the offer is from a qualified buyer. So if you want to put in an offer on any homes that you see, you will need to be prepared to move quickly, because typically that house will go under contract right away.
Know Your Mortgage Payment Amount
The second reason you want a pre-approval first is because you will be more informed on what your down payment requirement will be, what the closing costs will be and who you would like to pay for them, and what your payments will be. I’ve had clients put in an offer, and then come to me for the pre-approval letter, and they were shocked by how low of a payment I could get them. They realized that they could have put in an offer on a larger home that they liked more that they had seen earlier that week, but it was now too late as that home was already under contact by someone else.
Get the Right Mortgage Loan Program
The third reason is you may be able to get a better rate or qualify for a better loan program if you prepare first. One of the jobs of your mortgage broker is to analyze your credit report. Sometimes there is incorrect information that needs to be removed from your credit report, and it could raise your credit score substantially. Or I’ve seen where just paying down a bill a couple of hundred dollars can raise the credit score by 20 points. Now you qualify not only for a better interest rate, but sometimes can open up some other programs that might have a lower payment with it.
The reasons vary from the fact that you are going to need the pre-approval immediately, to being better informed and prepared before you go to put in your offer, and getting the best rate and program that you possible can. Always get pre-approved before shopping for a home.