As a first-time homebuyer getting pre-approved is crucial to your success in owning your dream house. However, many buyers are terrified to start the process as they do not know what to expect and why they should get pre-approved. Here I share with you my top four reasons, why you should get approved for a mortgage as soon as you start your search journey.
TO KNOW THE HOUSE PRICE RANGE, YOU CAN AFFORD
With the mortgage officer, you will be able to discuss your financial situation in detail. This discussion will make you figure out what works for you and exactly how much you can afford.
In this stage, you do not need to be embarrassed to reveal all your financial struggles as this will give the officer a bright idea about your situation so that they can provide you with the best advice.
TO HELP YOUR REAL ESTATE AGENT TO SERVE YOU BETTER
Once you know the house price range you can afford, you and I can work together to find the best house you can provide and satisfy all your needs. It is very frustrating that we go on a hunt for the perfect home to discover in the end that you cannot buy it.
TO BE AWARE OF ANY PROBLEMS RELATED TO YOUR CREDIT SCORE
Getting pre-approved will give you the knowledge you need as a first-time homebuyer on how you can qualify for a mortgage, as well as your credit situation. By learning about your credit score, and discussing your credit report, you will be aware of any issues that might hurt your financial situation in the future. This way, your loan application can go smoothly, without any unexpected delays or in other cases disqualification.
TO AVOID HIGHER MORTGAGE DEFAULT INSURANCE PAYMENTS
The insurance mortgage default insurance is mandated to protect your lender in case you default on your mortgage payment. Be aware that this is different from home insurance. By getting pre-approved, you will know exactly how much you can afford as a mortgage payment in light of your current and future financial situation and lifestyle.
So, the lender will add the insurance to the mortgage. The amount of the premium depends significantly on your income, salaried versus stated. The premium also depends on the down-payment you can afford and other financial information that will become clear once you get pre-approved. Unfortunately, mortgage default insurance is mandatory by the federal government, and you have to pay it.