The hardest thing for many first-time home buyers is just getting started. Some wander around in circles for a while trying to decide what to do. Most people don’t see a lender before they start going to open houses and finding a realtor because they are not sure what the first steps should be, but they should.
Unless you’re a financial expert, it’s best not to self-diagnose your financial situation in order to prepare for buying a home. If you’re not a car mechanic, you wouldn’t try and fix a car that wouldn’t start, so don’t try to guess your financial status if you’re considering a home purchase without the help of a loan officer who can walk you through your options.
Not only does this give you a realistic picture of the loans available to you, but it makes you more attractive to sellers and real estate agents alike. Here are five reasons you should get pre-approved for a mortgage before you begin the house-hunting process.
As mentioned above the appropriate time to get a loan officer involved in the home buying process is now. Your loan officer may be able to show you how you’re closer to being able to buy a home than you think. It’s likely that you are not aware of all of the financing options out there, so they will be able to open you up to numerous possibilities.
Credit Scores and Options
Loan officers can potentially find you options that don’t require you to have perfect credit. There are a lot of programs out there that accommodate individuals who have struggled to improve their credit and if your credit needs a little TLC a loan officer a loan officer is able to assist you in developing a plan to gradually improve your credit.
Working with a loan officer early on will help you to get pre-approved. This is beneficial as your offer on a home will stand out since you have your finances in order. If there are other offers on the table, they will likely feel inclined to go with those buyers who have pre-approval from their lender.
Just because you’re pre-approved for a loan doesn’t mean you have to stick with that loan. You can continue to apply for other loans from other lenders – just be sure to collect your offers on the same day, since mortgage rates change every day.
How Much Money You Will Need to Close
Additionally, your loan officer will be able to tell you exactly how much you need for your down payment, and also how to save for that if you need assistance with that as well.
Remember that the first check you write is often greater than the official down payment. You’ll probably have to pay lender fees (such as an application or credit report fees), and may pay points, mortgage insurance, title insurance and more. While the seller often pays at least some of the closing costs, your share might be as high as 3-5% of the home value.
Talk to a lender beforehand to get a sense of how much you’ll pay in points, mortgage insurance and loan fees, and verify that you have enough in the bank to cover these in addition to the down payment.
The Certo Team
55 N. Arizona Place Suite #103
Chandler, AZ 85225
Contact a licensed housing specialist now! 602-429-6789