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Do Not Make an Offer on a House Without Mortgage Pre-Approval

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What gives you clout, enables you to shop for homes within your price range, and helps you flex your homebuying muscles when you're ready to make an offer?

 

It's a mortgage pre-approval letter from your lender, of course!

 

So what is a  mortgage pre-approval?  In a nutshell, it's a letter from a lender saying that it's tentatively willing to lend you a certain amount for a property.  To get pre-approved, you will need to submit your financial documents to the lender who will then evaluate your income, your debt, and your credit score to determine if you qualify for a mortgage. 

 

Get the  Guide for First Time Home Buyers, and learn more about the process of becoming a homeowner.

 

Sellers and Realtors® love buyers with a mortgage pre-approval letter. This shows them that you're a serious, qualified buyer who has the financial backing of a lender and that you mean business. After all, unless you're paying cash, it's hard to make an offer if you don't know whether you qualify for a loan.

 

 

4 Reasons Not to Make an Offer on a House without Mortgage Pre-Approval

  1. Embarrassment. Making an offer, only to find out you can't secure the financing is an embarrassing situation. Going to your real estate agent and the seller to tell them you can't actually afford the house is not a fun conversation.
  2. Frustration. House hunting with no idea on how much house you can afford is a recipe for disaster. You could find all kinds of homes you love in perfect communities, but if they're out of your price range then all that searching is done in vain.
  3. Focus. Talking to a mortgage consultant along with your real estate agent will help you narrow your focus to neighborhoods right for you and your budget. From property taxes and homeowners insurance to the schools and crime rates, focusing on the best areas for you makes the process run more smoothly.
  4. Credit scores. Credit scores vary depending on who's pulling the report. Your score will differ if you pull it versus if a store pulls it, or when a car dealer looks at it during a loan consultation. Each of the three main credit bureaus report a little differently as well, so the number you get from one will likely be different from the others. So pulling your own credit, or having it pulled recently for a car loan does not ensure that you're in the clear to buy a house. Mortgage pre-approval will help make sure your credit score is mortgage-ready.

What do I have to do to get pre-approved for a mortgage loan?

Common documents for pre-approval include recent pay stubs showing your income, your credit report (your mortgage consultant will handle that), W-2 forms, 1099 forms if you own your own business, and banks statements. The more detailed your pre-approval process is, the more quickly final approval can happen.

 

Time to get pre-approved for a mortgage? Click the button below.

Get Mortgage Ready

 

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5 Reasons Not to Skip Your Home Inspection

You found a house you love—hooray! But with lots of other buyers breathing down your neck, you feel like you need to act fast. To make your offer more attractive to the seller, you might be tempted to skip your home inspection, but here are five good reasons not to! 1.) Not all problems are obvious. It’s easy to spot issues like a crack in the sink or a broken light fixture. But do you know how to recognize foundation problems, termite infestations, outdated wiring, or sewer system problems? Trained home inspectors do and taking the time to have them go over the entire property before you sign the papers can prevent you from buying a headache instead of a home. BOTTOM LINE: The great thing about an inspection is that if you see major problems you’re unwilling to take on, you can change your mind and walk away. 2.) You may not be able to afford the repairs. If you’re like many new homeowners, you may not have much set aside to pay for needed repairs after saving up for your down payment and closing costs. While you may not mind waiting a bit to repaint or update appliances, waiting on problems like leaky roofs, broken plumbing, or infestations will only make them worse, and some issues, like broken furnaces, may need to be repaired right away. BOTTON LINE: You don’t want to go deep into debt to keep your home safe and comfortable. Instead, it’s worth negotiating with the seller to pay for repairs. If they refuse, you can simply walk away. 3. Some problems can make it harder to insure the home. Getting home insurance is essential because lenders need to see an insurance policy before you can close on your home—and of course, you’ll want to have your home protected in case anything goes wrong. However, some companies may decide that your home’s older electrical systems, plumbing, or building materials make it too risky to insure. BOTTON LINE: If essential updates are needed, the only choices are to ask the seller to pay for them, pay for them yourself if you can afford it, or walk away from the deal. 4. Serious issues can affect the resale value of the home. Your home is probably the biggest investment you will ever make. However, if it has major problems, instead of building your wealth, it could turn into a lousy investment that threatens your financial well-being. BOTTON LINE: While a home inspection typically costs a few hundred dollars, it’s an excellent investment in your peace of mind and financial health. 5. Some problems can threaten your family’s health or even your life. This sounds scary, but it’s no exaggeration. Issues like lead paint, black mold, radon (an odorless radioactive gas), or carbon monoxide leaks can cause serious and sometimes fatal health problems. BOTTON LINE: These issues are also easy to miss without a professional home inspection, and it’s simply not worth taking the risk. While it’s not easy to compete with other buyers who are bidding for the house you want, home inspections are one area where you don’t want to cut corners. To protect your physical, financial, and mental health, there’s no substitute for a professional home inspection.

6 Tips on How to Buy a House in Today's Market

Buying a home may be the American dream. But with escalating home prices, rising interest rates, low inventory, and inflation, as a first-time buyer, you may be wondering if that dream is out of reach.

Let's Talk FHA Loans

  If apartment living is getting old, or you've outgrown your parents' basement and house rules, you may be thinking about buying your own place. For this reason, you may be interested in learning about home loans that offer low and no-down payment options and have flexible lending requirements. One of these is the FHA loan. Let's take a closer look. 

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