Are you considering buying a home? If so, you are joining a group of more than 6.3 million people in the U.S. who are planning to do this in 2018.
However, before you begin looking for a real estate agent and visiting potential properties, there’s something else you need to do – get pre-approved for a mortgage.
Not sure this is necessary? Consider the benefits of getting pre-approved for a mortgage here.
What Does Mortgage Pre-Approval Mean?
Before diving into the benefits of mortgage pre-approval, it’s wise to better understand what this means.
A mortgage pre-approval is something you receive from a mortgage lender that states you have been approved for a mortgage prior to selecting a specific property. When you go through this process, you’ll fill out a loan application and provide the lender with documentation about your income.
The lender will also pull your credit report and determine how credit worthy you are. You will do everything that you would if you were getting a traditional mortgage.
You can even begin learning about a 15-Year vs 30-Year Mortgage, and thinking about which option works best for you, although this is a decision you can make at a later date.
You will then receive a notification of being pre-approved and find out how much you are approved for. Once you have that, you can begin shopping.
Now that you understand what pre-approval means, you can dive into the benefits it offers.
You Know Your Budget
One of the biggest advantages of pre-approval is that you get to know what your budget is. With mortgage pre-approval you know exactly what you have been approved to borrow.
As a result, you also know how much your mortgage payment is going to be. There are quite a few people who spend time looking at properties that they could never be approved for.
This is a waste of time and can be quite disappointing. If you get pre-approved, you won’t have to worry about this.