Need To Know Mortgage Information For Real Estate Buyers:
If you are actively looking and are planning on buying a home, it would be a good idea to get pre-qualified or pre-approved for your mortgage loan before hitting the market.
What is the difference between being pre-qualified and pre-approved?
Typically you will first pre-qualify for an amount that is affordable given the financial situation. Then, a lender will work get pre-approved after you have found the specific home you wish to purchase.
So again, what is the difference?
Pre-qualification is an informal determination by a lender stating how much you can afford.
Pre-approval is a guarantee in writing by a lender to grant you a loan up to a specified amount.
Are there advantages of being pre-approved?
In a word, yes. There are two distinct advantages of being pre-approved for a loan as early as possible in your home purchasing process:
1. Sellers will find any offer you make more attractive if you are pre-approved for a mortgage. Most Sellers will not look at an offer without you being pre-approved.
2. The length of time before closing can be shorter if you’ve completed the steps to securing pre-approval prior to signing a contract on a property.
Selecting a Lender
When it’s time to select a lender, the goal is to obtain a loan with terms that are most favorable to your situation. In order to find the best home loan for you, contact several lenders to discuss the options they offer, their rates, closing costs, and other fees.
Loans are available from many sources, including mortgage companies, savings and loan institutions, banks and credit unions.
Applying For A Mortgage
When selecting a lender, your goal is to obtain a loan with terms that are most favorable to your situation. In order to find the best home loan for you, contact several lenders to discuss the options they offer, associated rates, closing costs and other fees.
For simplicity, many homeowners request to have their lender pay these related fees for them through an escrow account, wrapping them into each monthly payment. Regardless of whether you decide to go this route, or pay taxes and insurance directly, you should also factor these home related expenses into your budget.