When looking to buy a new home, it is hard to know if you should be looking at houses or searching for a lender first. While the answer is technically yes, you should find a property prior to applying for a ; the answer is also no. I say the answer is no because while you won’t apply for a mortgage before selecting a house, it can be very beneficial to talk to a lender before choosing a home, and this article will discuss why.
Knowing How Much House You Can Afford.
No one wants to go through all the trouble of going to tons of open houses or setting up appointment after appointment to have at last found your dream home to realize that you cannot afford anything close to what they are asking for it. This is not only embarrassing but can be very disappointing and disheartening. Even if you have gotten online quotes, they are not a guarantee. Speaking with a financial institution can get you a pre-approval and ensure that you have a lender willing to give you a mortgage.
Pre-approvals Help a Seller Know You are a Serious Buyer.
Having a pre-approval for an amount that exceeds the price of the house you are looking to purchase shows the seller that you can afford the home. You can expedite the process for both you and the seller by showing that you are not only a serious buyer but that you also already have all of your paperwork in order. By having spoken to a lender first and obtaining a pre-approval, you show the seller that you are ready which may make your offer more attractive than other options. A pre-approval makes your offer guaranteed money with the likelihood of a faster closing than any offer not backed with the forethought of getting a pre-approval from a lender.
Closing Costs Can be Difficult to Determine.
Often, when buying a home, there are closing costs that exceed the amount you paid as a down payment. Typically, the seller and the buyer split this expense. The exact amount that you will be responsible for can be a bit challenging to figure out; however, talking to a lender before the loan application can give you a better idea of what percentage of the homes cost will be your closing responsibility. Knowing the closing costs upfront can help you gauge what kind of down payment you can make as well as have a better idea of the end price point you will have to pay. Your lender will be able to answer questions regarding much more than just the closing costs at your first meeting. They can help you get a better understanding of the entire process.
Starting the Paperwork is Just the Beginning
Getting a Pre-Approval Does Not Lock You In With That Lender
Even if you have received a pre–approval for a home loan from a particular financial institution, that does not mean that you are required to get your home loan with that lender. You can apply for other mortgage with other lenders as well. However, you want to remember to get your rate offers on the same day as interest rates for home loans change daily. Also, you will want to finish all of your loan shopping within a week or two because each time a lender pulls your credit report, it can cause your credit score to drop a little. Though the miniscule amount that it will change may seem unimportant, just a few points off your credit score can translate to tens of thousands of dollars in additional payments due to higher interest rates. When you make all inquiries within two weeks, they typically show on your credit reports as one inquiry, which helps to save your credit score.
Nationwide Home Loans and Your Mortgage
NHL Lending offers some of the best home loan rates in . We provide an online that can be filled out today and we have multiple mortgage options available. Our team would love to communicate with you today about how we can help you get started on the home loan process. Please consider using Nationwide Home Loans for all your mortgage needs.