You might be contemplating a home purchase sometime soon, but you aren’t necessarily ready just yet. You may be perusing listings online and spending your Sunday afternoons visiting open houses, but aren’t quite in the emotional and financial position to put in an offer on anything. This could be a good thing, as it gives you more time to prepare yourself for this big purchase.
What happens when you walk away from your offer on a house? Find out here.
In fact, one of the first things you should do before you gear up for house hunting is to speak with a mortgage specialist. What’s the point, you ask? There are plenty of reasons why a trip to your mortgage broker’s office is a good idea even before it’s time to start some serious house shopping.
Here are just a few.
Focus on Your Price Range
It would be futile to start looking at all sorts of houses that are out of your price range. Not only would this be a waste of time for both you and your real estate agent, but it would also set you up for major disappointment. By speaking with a mortgage specialist, you can get the pre-approval process started so that you can find out what you’d be able to comfortably afford to spend on a home purchase.
Your mortgage specialist will conduct a credit check and ask for a few documents from you to identify where your finances stand so that you’ll have a much better idea of the price range of homes that you should be looking at. This will help you focus on homes that meet your criteria – including the listing price. It would be a huge time-saver for you and will save you from heartbreak after falling in love with a house you can’t afford.
Click here for some any more questions you should ask your mortgage broker.
Get the Paperwork Out of the Way
While getting pre-approved for a mortgage is only the first step in the actual mortgage application process, you can get a lot of the work out of the way by getting all the necessary documents prepared in advance.
The mortgage application process can be a lengthy and cumbersome one. Your mortgage specialist will ask for all sorts of documents from you that could take you some time to get in order or request copies of from a third party. For instance, you will probably have to gather documents such as your bank statements, income statements, letter of employment, tax filings, statements of assets and liabilities, and more.
All of this takes time, and if you get this out of the way sooner rather than later, that’s one less task you’ll have to worry about when it comes time to actually get the mortgage process going once your offer on a home has been accepted.
Check out this infographic to find out how much it costs to purchase a home in your city.
Shop Around For Different Mortgages
Every lender offers a slightly different array of mortgage packages, each of which comes with its own terms and rates. Rather than settling with your local bank for your home loan, it makes sense to shop around and compare the different features of mortgage packages that various lenders offer. You can end up saving a lot of money for your efforts.
Comparison shopping takes some time, so getting a leg up on this task sooner in the process can give you plenty of time without having to scramble at the last minute. This is a big financial decision, so you want to be sure you’re not rushed. By starting the process early, you don’t have to.
Want to know why different lenders offer different mortgage rates? Read this.
Be Prepared Once You Find the Right Home
Even if you’re not serious about buying just yet, you’ll be adequately prepared once you are. As soon as you start pounding the pavement in search of a home and find one that you’d like to put an offer on, you’ll already have a mortgage pre-approval in hand. This can help you get your foot in the door, especially if you happen to be looking for a new home in a hot seller’s market.
Sellers don’t want to be dealing with buyers who don’t have the financial means to support a home purchase, no matter how interested they may be in the property. Sellers want to have the assurance that the buyer who submits an offer has the financial capability of obtaining mortgage approval and isn’t just unrealistically wishful about the entire process. By being pre-approved in advance, you’ll look better in the seller’s eyes.
Uncover Any Credit Issues in Advance
You might think all is well with your credit rating and financial health, but it’s possible that there may be an issue that you’re unaware of. By having your credit report pulled, you’ll get a much clearer picture of what your credit score is really like.
Here’s how you can get a free yearly copy of your credit report.
If it’s not as high as it could be, you have some time to bring it back to par. Your mortgage broker will make a few suggestions about what you can do to bring your score back up, such as making your payments in a timely manner, spending no more than 30% of your credit card limit, and avoiding additional loans, among others.
You’ll also have a chance to see if there are any errors on your credit report that could be pulling down your score. If there are any discrepancies, now’s your chance to have them investigated. Even the slightest mistake could shave off a few points from your score, which can mean the difference between an approved versus a denied mortgage application. Rectifying any errors could reverse this negative effect.
If you find an error on your credit report, here’s how you can dispute it.
Final Thoughts
Just because you’re not ready to pull the trigger on a home purchase just yet doesn’t necessarily mean that you can’t be proactive and consult with a mortgage specialist today. Doing so and getting pre-approved for a home loan can put you one step ahead in the game and get you well-prepared before it’s time to make the leap to homeownership.
