Know before you buy – good advice for all consumers, especially when buying your first home. There’s a certain logic to doing things in a specific order. Getting prequalified is one of those logical first steps when thinking of buying a home. The mortgage prequalification process helps you focus your search on the types of properties that you can afford, based on the lender’s willingness to lend. Buying your first home is an incredibly exciting time, yet it can be a stressful time, too. That’s why getting prequalified for a mortgage is the best way to start. A mortgage prequalification takes the guesswork out of home shopping and can be best described as a prediction on the amount you can borrow.
Having a mortgage prequalification also takes the guesswork out of home shopping. By talking to one of our mortgage lenders at Chelsea State Bank before looking for a home, you’ll have a clear and comprehensive understanding of your financial situation. This process will identify any potential problems with your credit ahead of time, and let you know what homes are within your price range. Don’t waste weeks looking at houses that don’t fit your needs, when a simple prequalification will make it clear at a glance which houses are actual options.
Timeline From Mortgage Prequalification to Closing
In most cases, your Realtor will want to know that you are prequalified to purchase a home before you even begin to look at houses. The seller is more likely to accept your offer if you are prequalified. In the current real estate market, many sellers are getting multiple offers on their homes. Beating out the competition by making the best all-round offer is as important as finding the right house in today’s tight housing market. Imagine a seller has two offers on their house. Both were for the same amount of money, but one offer had a prequalified mortgage, while the other one didn’t. Most times it is usually pretty clear which offer gets accepted.
That’s why you want to avoid putting yourself in a position where your dream home could slip out of your fingers, especially when you could have secured the sale with a prequalified mortgage. In fact, some sellers might even be willing to take smaller offers if it comes with the guarantee of a smooth deal that a prequalified mortgage brings. Having your money ready will put you in a stronger negotiating position, allowing you to get one step closer, not only to own the perfect home but true financial freedom.
The nightmare scenario for you as a homebuyer is finding out the deal you thought could work, turns out to be a deal you can’t afford. Imagine making an offer on your dream house and having it accepted by the seller, but then finding out at the bank that you don’t have access to any financing. By looking for a home without getting your finances in order, you are opening yourself up to a lot of unnecessary risks. Another good reason to take the time to get a prequalified mortgage in place so that you can make an offer with confidence.
A final thought, the prequalification review process is no substitute for old-fashioned budgeting. You will want to still take a good hard look at your income and expenses to determine how much of a monthly payment you can afford. The prequalification process begins when you’re actually ready to start shopping for a home. You will want to have a budget in mind when you move onto this next stage because you’ll know what is possible for your lifestyle and budget.
If you’re thinking of buying a house and want to learn more about a mortgage prequalification, talk to one of our experts at Chelsea State Bank about costs you can expect in the first year and beyond for home ownership. You want to have the full homeownership cost and we can help you make those calculations. Call us at (734) 475-4210 or visit us online here.
Chelsea State Bank is an Equal Housing Lender.