Being able to save some money when you buy your house is important to getting a good deal. One way to lower your price even further is to get preapproved for a mortgage. By getting preapproved for a mortgage, you can save a considerable chunk of money, and find that home sellers are more interested in talking to you.
The current housing market now requires that you get preapproved for a mortgage, says Lisa Scherzer at SmartMoney.com. By having this preapproval letter, you will find that real estate agents and sellers will know that you are serious about buying a new home, and they, in turn, will work harder to help you find the home you want.
A preapproval letter for a mortgage will also give you better bargaining power because they would know that you will most likely be able to get the money when it comes time to finish the deal. Better yet, though, is that you will have more power to negotiate with realtors and sellers. When you make an offer, your offer will have more weight to it because they would be quite certain you could get the mortgage.
Mortgage preapproval will also enable you to get through the mortgage application process quicker. Sometimes, when applying for a mortgage there may only be a limited time period to apply for it, get approved, and be able to complete the sale.
Mortgage Preapproval Gives Time to Shop Around for Better Deal
Another advantage of getting preapproved for a mortgage is that it can save you money by giving you time to shop around and see which lenders might give you the best deal. Each lender will have different interest rates, but with a mortgage preapproval you can also get a lock on your rate. These are only good for a certain amount of time, but when you find a good rate, you will want to take this step, says Colin Robertson at Money.USNews.com.
Getting preapproved for a mortgage is better than getting pre-qualified for a mortgage. The pre-qualification is only a general approval based on statistics you provide the lender. It will enable you to have a good idea of what price house you can buy. A preapproval, on the other hand, only takes place after an in-depth investigation into your finances and other matters. This will, for the most part, guarantee you a mortgage. However, changes in your employment, debt, or income could still prevent you from getting it, and an appraisal will also need to be performed once you have decided on a house.
Another way to save even more money is to have co-signers with you on the mortgage. Each one will have to be approved separately in order to ensure their ability to pay, and they will need to show proof of income and have a good credit history.
You also need to be aware that some lenders will charge you for a mortgage preapproval, but other ones will not. Instead of looking around yourself to get preapproved for a mortgage, you may want to select a broker. This may be a better way to go if you have poor credit or no documentation.