Know before you buy is good advice. When buying a home, it’s important to understand what you can afford. That’s why getting pre-qualified for a mortgage is the best way to start. A mortgage pre-qualification can be best described as a prediction on the amount you can borrow. There are many costs associated with buying a home. By getting a pre-qualification, you will have a very strong understanding of what costs you can expect when buying a home, so there are no surprises. Here are three reasons to get pre-qualified:
1) Know Your Mortgage Potential
The first involves affordability. It takes the guesswork out of home shopping. Buying a home is a stressful process, but instead of rushing around town, desperately searching for a decent home, know before you look. Meeting with a loan officer at Chelsea State Bank before seriously starting your search will let you know exactly what homes are within your price range. A pre-qualified mortgage will give you the freedom to shop with ease of mind.
By talking with a mortgage loan officer at Chelsea State Bank you will have a clear understanding of your financial situation. A problem with your credit will be identified ahead of time. If your debt-to-loan ratio is out of sync you can get that corrected before moving forward to identify potential homes to buy.
It’s not unusual to not know what your credit score is, especially if you are a first-time buyer. It’s also possible you may not know if there is a problem with your credit. The most common problem is the score or an error with a buyer’s credit. Most people don’t monitor their credit report. It’s very possible you could have an error and not know it. The pre-qualification process will help to find it.
2) Negotiate with Pre-Qualified Buyer Power
Second, when you find your home and make an offer, a seller is more likely to accept it when they know you already passed the first hurdle, getting pre-qualified for a home loan. In today’s market, most real estate agents will only work with pre-qualified buyers.
Because the Michigan real estate market is so strong right now, many sellers are getting multiple offers. Beating out the competition by making the best all-around offer is as important as finding the right house in today’s market. If you are pre-qualified and another potential buyer has made a similar offer, but has not been pre-qualified, you will have the inside track. Some sellers may even be willing to take smaller offers if it comes with the guarantee of a smooth deal that a pre-qualified mortgage brings.
3) Know Your Home Affordability Index
Third, in our very competitive market, you don’t want to find yourself out in the cold without financing or finding a deal that you can’t afford. By looking for a home without getting your finances in order, you are opening yourself up to a lot of unnecessary risks and disappointments. Take the time to get a pre-qualified mortgage in place so that you can make an offer with confidence.
In summary, buying your first home is an incredibly exciting moment, but getting the right house at the right price takes a lot of preparation. With a pre-qualified mortgage, the process will be much less stressful, put you in a better position to seal the deal, and will help you to avoid financial problems after you make an offer.