So Now What?
If you knew what what going to happen before it did, would you feel more comfortable and in control? My guess is that you would!
Flick! Light goes on, and the decision’s been made: We’re buying a home!
Congratulations!! Its exciting, scary and if you’ve never purchased real estate before, completely foreign. So where do you begin, what should you do next and what happens after that. Not knowing what to expect can be stressful and potentially derail the purchase of your dream home. Most home owners will need a mortgage and that is where the process best begins.
Pre Qualified vs Pre Approved Mortgage
Although these are interchanged frequently, they actually don’t mean the same thing. But both are important in their own regard. Depending on the stage you’re at, you may have already begun this process. If you haven’t this is the best place to start because it allows you know what you will be able to afford before you spend time looking at homes you “think” you can afford.
Pre-qualifying is the simplest process between the two. You might be able to do it over the phone within a few minutes even. After providing some basic information to your bank or credit union, they will be able to give you a “ball-park” or general idea of what you can afford without actually running your credit. You can then decide if you want to adjust the amount down, or top end of your range depending on what you find out.
Pre-Approval is the real deal. You will need all the information required to give you a Good Faith Estimate (GFE). A GFE is a document that details the terms of the loan. Please note that it does not guarantee you will get a loan from the bank at those terms. Any large purchases using credit, a sudden change in income or the market can change your pre-approval at any time. It is recommended that if you’re going to get a pre-approval, you get multiples. The only way to compare loans side by side is the have each one’s GFE next to each other to see the “Devil in the Details” so to speak. You can then use the differences to negotiate, but without the information if front of you it’s a mute point.
Next: Offers and Disclosures
We all want what’s best for ourselves and our family, and understanding what you can do to put yourself in a better position can go a long way toward just that. Please do take the time to contact your local banking institution, but don’t forget about mortgage brokers. You have multiple options. And getting multiple pre-approvals in a short time frame will not hurt your credit but will give you the chance to get the best available mortgage.