Secure a Pre-Approval Letter
When it comes to getting a mortgage, qualifying for a loan is very different from actually getting approved. It’s easy to confuse the two terms, as lenders are all too happy to pre-qualify applicants. Unfortunately, pre-qualifying only provides an estimate of how much a lender would be willing to lend you based on your income and credit. This is a good first step in your home ownership journey, as pre-qualifying will give you a ballpark idea of what type of home you will be able to afford. However, once it’s time to start making offers, you’ll want to make sure you have the actual pre-approval available.
With pre-approval, a lender will thoroughly review your finances and confirm in writing how much they are willing to lend you. It is important. This not only provides concrete confirmation of the loan but will signal to the seller that you are taking things seriously. Given how competitive the real estate market can be, pre-approval can give you a serious advantage over other buyers who haven’t taken this step yet.
Shop for the best interest rate
Let’s say you take the steps listed above. You check your credit score, apply for a mortgage loan, and get pre-approved. All set to propose, aren’t you? not so fast. You wouldn’t buy a car (or other big purchase) without shopping around first. So why would you take the first mortgage quote given to you?
According to the Consumer Protection Financial Bureau, comparing mortgage rates from at least three lenders can save you more than $3,500 over the first five years of your loan. Once you have several quotes, start comparing rates and fees. Believe it or not, less than 25% of home buyers actually do this. This means the majority are leaving potentially the best deals on the table. Don’t make the same mistake!
