In my 19 years originating home loans in the state of Alaska, I’ve met a lot of people with a lot of different home shopping situations. Most people know that getting prequalified for the mortgage is an important step in the process, but really don’t know when they should start. Should they find the home they want and then come to me to get the details on the down payment and monthly payments? Should they get prequalified well in advance of house hunting? If they have a house to sell or rent, does that change when prequalifying should happen?
In my experience the answer is always get prequalified as soon as you think you might be moving into another home. Here are some reasons why…
1. You need the knowledge of monthly payments before you shop. Finding the perfect home and then finding out the payments are much higher than you can comfortably afford or qualify for isn’t a pleasant way to go through this process. You’re not going to want to be house poor, so confirm the range you can shop in before you tease yourself with properties that have payments beyond your comfort.
2. Getting prequalified improves your position as a buyer in the marketplace. Sometimes homes are in high demand with multiple offers – buyers with their prequalification letter from a trusted local lender in hand have a leg up on buyers who do not. Many sellers also do not want to show their homes to buyers who are not prequalified – be the person who is ready to go and improve your power in the market.
3. Sometimes issues arise on a credit report that need fixing before the best loan terms can be achieved. With enough lead time, credit repair services can be used when needed, or paying down debts can improve credit scores and loan terms. These issues that can make or break your ability to purchase or get you a better interest rate, and it’s much nicer to have time to pave the way to home ownership in the best way possible instead of under duress when you’ve already found your dream home.
4. Down payment requirements are important to know up front. You’re going to want to have enough to close on the house and maintain a buffer for repairs or emergencies. Knowing what you need ahead of time gives you time to plan and prepare to buy when you are actually ready financially. The source of funds can also require some planning ahead to avoid delays in closing a home – it’s good to know these things up front.
5. The most important reason to get prequalified? Knowing that your finances are in shape when you are out shopping in the marketplace. Shopping for a home with the confidence that you can afford what you’re doing is such a better way to go through this experience, so why would you want to do it any other way?
Please give me a call if I can help you with this next big step in your life. There’s no charge to get prequalified, it will make your experience so much better, and I would love an opportunity to help you make this part of the process as pleasant as possible.