Getting pre-qualified for a home loan is a big deal. It’s not something you have to do, but it is a step you might want to take. You see, when you find that property and start making an offer, you want to be prepared. That signifies to the seller that you mean business. The agents take notice and know you’re serious, and chiefly, you have peace of mind knowing you’re looking at a property you can afford.
Determining affordability on your own is one thing, but you also need to be sure that you are approved by lenders. Pre-approval is just the first step in actually applying for a mortgage, but it still goes a long way. For starters, you will already have your ducks in a row in terms of financial documentation, knowing how much of a home you can afford, etc. You will have also addressed any credit issues, and you will know that you have the right down payment ready to go.
You will have looked into mortgage interest rates, too, so that you’re able to know what you can expect. Ultimately, you have to take the rate that the mortgage company gives you, so a pre-approval will fill in more of the blanks. It really helps being pre-approved before you really get serious about looking at homes to buy.
What type of home loan are you looking for? That’s something else you need to consider. There are different types available, including both conventional and ARM loans. There are some disadvantages to ARM loans that many consumers don’t like. That is especially true concerning the market in 2018 and where everything stands.
You still have a choice as to the type of mortgage loan you take out. And you even have choices when it comes to the conventional loan option itself. For example, do you want a 15 year mortgage or a 30 year mortgage? The 15 year mortgages are very popular these days. You would owe a larger mortgage payment each month, but you would be able to save a lot of money when it comes to interest.
Your home would also be paid off much faster, freeing up your budget. You can imagine that you would be much better off in many ways with a 15 year mortgage, but it really depends on your situation. If you can afford a 15 year mortgage on the type of home that you want to buy, then go for it. Sometimes people have to look at getting a 30 year mortgage because they want to afford a more expensive home.
Either way, a conventional mortgage loan means the rate never changes. You will know what to expect for the entire loan. Now, are you familiar with the mortgage companies available to you these days? You’re going to need to work towards the pre-approval process, involving all the steps mentioned above. Once you get pre-approved, you’re going to have a much easier time looking at properties that you might want to buy.