If you are considering buying a new home, there are several steps you can take to make the process a bit smoother, such as getting pre-approved for a mortgage.
Many begin their home search by considering the area they want to live in, what type of house they want, and how many bedrooms and bathrooms the house will have. Then they begin to look at homes, either online or in person. However, if they have not taken the time to consider the financial implications and determine how much they can afford, they have overlooked an essential step in the process.
All too frequently, I will receive a call from a potential homebuyer telling me they have found their dream home and want a pre-approval mortgage to submit their offer. Nothing is more disappointing than going through all that effort, thinking you have found the perfect home, and then finding out it is beyond your reach!
When should you get pre-approved?
Timing your mortgage pre-approval may depend upon your financial situation.
If you know that you have credit issues, such as previous short sales, foreclosures, or bankruptcies, it is best to begin the process as early as possible. However, underwriting guidelines regarding waiting periods required after experiencing one of these events continue to change. Therefore, you will want to know whether sufficient time has passed before you begin your home search. (See our related blog on FNMA guideline changes.)
If you have not looked at your credit in a while, you should obtain a credit report before looking for a home. Even if you think your credit is good, I have seen many instances where the borrower had no idea about some derogatory information being reported on their credit.
If there are errors on your credit report, you will need time to make corrections before buying your home. If you have previously disputed items on your credit, those “disputes” often remain on the credit report for a long time, even after the dispute has been resolved. Many loan programs will require that the credit report not contain disputed items. This is another instance where you will need time to make these corrections. Sometimes removing disputed items can change credit scores, so you will not know your accurate score until corrections are made. By getting pre-approved early, the lender will run your credit and most likely be able to assist you with expediting any necessary modifications.
Many procrastinate the pre-approval process either because they feel they are not ready for it or because it will require too much time. And let’s be honest – it’s a lot more fun to go out and look at homes than digging through your tax returns, pay stubs, and bank statements to provide accurate information to the lender. In addition, for working couples, taking time off work to sit with a lender may not be possible.
At Marimark Mortgage, we strive to make this process as stress-free as possible. First, we go through the loan application over the phone with borrowers and obtain their documents electronically. After-hours evening and weekend appointments are also available. Then, within less than 1 hour, you will have your pre-approval, and a letter will be sent directly to your real estate agent.
Having a pre-approval letter ready when you go out to look at homes, in most cases, will be required by your real estate agent. However, more importantly, it shows the seller you are ready, willing, and able to purchase.
It’s Never Too Early
I recently worked with a borrower who first came to me almost four years earlier! They knew they had some credit issues and wanted to plan accordingly. As a result of patience and planning, they got the best rates possible as they worked on their credit, saved for a 20 percent down payment, maintained consistent, steady employment and income, and knew they were ready.
So, I believe it’s never too early to be pre-approved for a mortgage!
We specialize in conventional home mortgages, FHA, VA, and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing, and help clients to lower their monthly mortgage payments.