2 Tips For Getting Financially Ready To Shop For A New Home
If you've been watching the real estate market, you may have noticed that home prices are going up and homes are selling faster. While real estate markets vary from location to location, if you live in a place where the market is hot, you may be anxious to buy a home. The first thing you need to do is get your finances in order so you can qualify for a mortgage through a lender like Mortgage Edge. Here are two suggestions that may help put you on the path to home ownership.
Seek Preapproval From A Mortgage Lender
It's disheartening to fall in love with the home of your dreams only to find out you can't qualify for a mortgage. Avoid that problem by getting preapproved before you start looking for a home. A preapproval isn't a certainty that your mortgage will go through, but it is more solid than a simple qualification. When you're preapproved for a mortgage, you'll receive a preapproval letter that your real estate agent can use as proof you are serious about buying a home and that you will likely have the funds for making the purchase.
The preapproval process takes a look at all your financial details and runs a credit report. It can estimate the amount of loan you will likely be approved for, but since you aren't actually applying for a set amount of money, it stops at the underwriting process. Once you've found a home you like and finish the loan process, you'll learn if you're actually approved for the mortgage. This allows you to shop lenders for finding the best terms and for finding a lender willing to finance your home.
Maintain Tight Control On Your Finances
You should have copies of all your credit reports and cleaned up any errors before you start house shopping. If your credit is fair or poor, you should probably take time to clean it up. It might be something as simple as paying down the balances on your credit cards to decrease your utilization percentages. You should also be careful about applying for any new credit until after you've bought a house.
Getting your credit score as high as you can helps increase your chances of getting a home loan and it also lowers your interest rate so your monthly payments are lower. It's particularly important to maintain control of your finances in the period between being preapproved and going through the underwriting process, which could be a few months later. A change in your credit score or financial status could cause your home loan to be declined.
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