It’s always interesting to me when I hear the things people are nervous about, heading into a pre-approval meeting. By now, especially if you’ve followed any of my previous content, you know that the best thing to do when you start considering buying is to meet with your lender. I’ve found over the past few weeks of polling that the reason many people don’t do this first… is because they are actively avoiding it.
Of course that’s counter-intuitive unless you have the cash to pay for the home outright, in which case I’m assuming you wouldn’t be too ashamed of your finances. If you need a mortgage in order to buy a home, you can’t really buy a home unless you know how much of a mortgage you qualify for.
Rip the Band Aid!
Usually, it’s the credit component that first time buyers seem to be the most nervous about. You should be aware that the score you’re seeing online isn’t the most relevant to your loan qualification. There are hundreds of algorithms that determine your credit score – only some of them are approved for mortgage purposes. So when we pull your credit, it will be slightly different than if you had it pulled for the purposes of an auto loan or than the score your credit card may be showing you.
Know this – I’ve seen it all. Nothing on your report is going to give me nightmares. You may sleep better though, if we have a plan in place to get your scores up. Or you scores might be better than you thought and you’ve been losing sleep for no reason.
Ignorance isn’t bliss.
You may instead be concerned about not having enough down payment funds. This is where knowing your options is really empowering. When you apply for pre-approval, one of the steps in this process is for your lender to research which loan programs you qualify for. There are options for as little as 3% down and then grant programs which can assist with that. So if you are thinking you need 20% down or a huge chunk of money, that isn’t the case.
You want the best mortgage.
The focus is on your dream house but it should also be on obtaining the best possible financing strategy. The more time you allow for this search to play out, the better. When you wait until you’re about to make an offer on a home to get pre-approved, you are going to end up with the quickest and easiest mortgage. At that point, we are limited by the deadlines of your contract. When you’ve allowed your lender time to improve your credit, you may get a slightly better rate. When you’ve allowed your lender time to explain and compare loan programs, you may spend less money on interest and mortgage insurance over the long run. When you’ve allowed your lender time to educate you on down payments, you may end up with a better monthly payment. When you’ve allowed your lender time to address any potential hurdles in your personal loan file, you may just end up with the smoothest escrow process ever.
A pre-approval doesn’t expire. We work together to keep it current and it doesn’t cost you anything extra if we spend more time working together. So why not start today?