Most people realize that getting prequalified for the mortgage is an important step in the process; however, they truly don’t have the foggiest idea when they should begin. Should they find the home they want and then come to me to get the details on the down payment and monthly payments? Should they get prequalified well in advance of house hunting? If they have a house to sell or rent, does that change when prequalifying ought to occur? Here are 5 reasons why you should:
- A confidence boost can mean better negotiation skills
Now don’t get too saucy; however, being prequalified for a mortgage loan should help you feel more assertive as you’re home-shopping, particularly if you’re a first-time homebuyer. No fraud condition here. Do you like those light fixtures? Ensure they’re in your proposal to purchase! Why not request all that you need — you’ve been prequalified, and that will convey some genuine load with the sellers.
- You need knowledge of monthly payments before you shop. Finding the perfect home and finding out the payments are much higher than you can comfortably afford or qualify for isn’t a pleasant way to go through this process. You’re not going to need to be house-poor, so confirm the range you can shop in before you tease yourself with properties that have payments beyond your solace.
- A competitive advantage
It’s a sellers’ market, and that implies you may require additional ammunition if you want to place an offer on a decent home in a desirable location. A prequalification not only makes your offer credible but also affords you an advantage, should you submit an offer at the same time as another home-shopper. A prequalification could be one of the deciding factors in the seller accepting your offer over another.
- Sometimes issues emerge on a credit report that needs fixing before the best-advanced terms can be accomplished. With enough lead time, credit repair services can be used when needed, or paying down debts can improve credit scores and loan terms. These issues can make or break your ability to purchase or get you a better interest rate, and it’s much nicer to have time to pave the way to home ownership in the best way possible instead of under duress when you’ve already found your dream home.
- Know what you can afford
Regardless of whether you’ve crunched the numbers yourself, it pays to meet with your lender, lay out all your finances, and determine what you can afford. It will save you time, energy, and potential disappointment if you find out you’re home-shopping at excessively high of a price point before you make your offer (or conversely, perhaps you can afford more than you realize). Furthermore, getting prequalified can be a decent method to spot potential issues with your credit before making a serious offer on a home.