The Importance of Mortgage Pre-Approval
There are several steps that one should observe when buying a new home. One of the most vital of these steps is getting pre-approved for a mortgage. This step is of paramount importance because it will determine the home that you are able to purchase. You will find that the desired characteristics of a home, rooms, bathrooms etc will be highly dependant on the amount that you are able to secure for the mortgage.
That being said there are different kinds of pre-approval. Normally banks will do two different pre-approvals: a quick qualifier and a full pre-approval. The Quick Qualifier is a fast assessment of the amount that you are qualified for in terms of a mortgage loan. It is dependent on a few factors: your income, your down payment amount, your credit bureau report, and an appraisal of the property. Keep in mind that the amount of the Quick Qualification might not be the same as the final full mortgage pre-approval.
The full mortgage pre-approval goes far deeper into the small details of your financial picture to define the final amount that is available to you for a mortgage loan so it an extremely important step to secure a full pre-approval before making a bid on a home. To avoid the heartache and embarrassment of making a bid that your financing will not cover, be sure to have a full pre-approval before you start your home search.Many inexperienced home buyers have learned this lesson the hard way, making an impulse offer on a home that they cannot stand behind financially when the final numbers are calculated.
To save yourself this trouble and the possibility of having to scramble to secure the necessary financial resources to purchase your ideal home, secure a full pre-approval with a definite number. Now you have your budget organized and can shop for a home secure in the knowledge that if you find that perfect home in your price range, that an offer can be made in full confidence.
There are a number of other reasons that getting a full pre-approval is a good idea. It allows you the peace of mind of shopping for a home knowing that if you find that special property, you'll be able to make a concrete offer on it with your financing firmly in place. Another desirable aspect of pre-arranged financing is the fact that having that "ace-in-the-hole" allows a certain amount of leverage over competing buyers that do not have the pre-approval. It is a known fact that if two parties are interested in a property, whichever has the pre-approval is likely to be the buyer whose offer is accepted. Sellers do not want a sale to drag on and pre-approved financing means that the process will be quick and profitable for both parties.
There is another term that must be considered: "Loan Commitment." This process occurs after the home inspection and title search have been completed. There are many conditions that must be met by both the property and the home buyer. This involves a second check of the buyer's credit report to ensure that nothing has changed in a negative way and verification that the title search has returned with no complications. These can include things such as liens, pending lawsuits, and right-of-way issues. Once all these issues have been satisfied, the lending institution will issue a loan commitment. This is the iron-clad agreement to provide the necessary financing for your new home purchase.
REW Writers is a collective publication network facilitated by Real Estate Webmasters (www.realestatewebmasters.com) each article is contributed by a member of our real estate community (www.realestatewebmasters.com/forum.php) . This particular article was submitted on behalf of Jake Marsh (www.jakemarsh.com/)
Article Source: EzineArticles.com/?expert=M._Shane (ezinearticles.com/?expert=M._Shane)