Not too many years ago, becoming pre-approved before searching for a home was unimportant. Now, it’s almost mandatory.
That’s because a few years ago almost anyone could get a mortgage loan. Now that the banks have tightened up on their regulations, it isn’t so easy.
In addition, thousands of consumers who had high credit scores lost that status when the credit card companies suddenly slashed credit lines. Since 30% of a credit score is based on how much credit you use compared to how much you have, credit scores plummeted overnight.
Because of these changes, sellers are wary of accepting offers from buyers who don’t have that pre-approval letter in hand. They simply fear taking their homes off the market without some assurance that their buyer will actually be able to perform.
Thus, when two offers come in and one has pre-approval for the mortgage loan, that’s probably going to be the accepted offer.
Pre-approval also gives you as a buyer an advantage. Finding your lender and your loan ahead of time means you can shop for the best loan program and the best interest rates. It also gives you fair notice if you need to be looking for a home that will, for instance, qualify for FHA financing.
In addition, pre-approval lets you know the maximum dollar you can spend on your new home. You probably already know how much you can afford to pay each month, but the loan program and corresponding interest rate will dictate how much you can pay for a home and still stay within that figure. Just 1% can make a big difference.
Knowledge really is power. So make choosing your lender a top priority as you begin your home search.
I’ll help… unless you have someone you’ve used successfully in the past or have a solid referral from someone you trust, give me a call. I’ll be happy to give you a list of mortgage loan officers who have done well by my clients.
If you have questions about the real estate market or purchasing a home in San Diego please feel free to contact us.