Instead of running out house shopping for your dream home, it is always in your best interest to contact a lender and become either pre-approved or pre-qualified for a home loan. The main reason is that if you find a home that you really love, put in your offer, and then apply for a loan, you may find that you do not qualify for the home loan. The best way to ensure you do not have to walk away from your dream home is to be pre-approved prior to searching for your new home.

What a pre-approval will do for you is give you more buying power! You will know exactly how much home you can afford to buy and even an estimate on your monthly mortgage payments. In order to get a pre-approval letter, you must contact a lender. Next, you will fill out an application. You will have to answer such questions as how much would you like to spend, show proof of your income, and a credit report will be ran. After the lender has all of this information and has looked at how much money, you spend for such things as credit cards, car payments, and any other expenses they will be able to determine if you can afford to buy a home in the price range you would like. Not only will you have a better idea of what price home you should be looking at you will also receive an estimate on all other costs you will need to pay in order to receive a home loan.

When the lender has the information together, they will be able to research to find you the best loan for your situation. Some individuals may not be able to qualify for a FHA loan, but will be able to qualify for Portfolio loan. The lender will be able to give you all the information so you will know your interest rate, the length of the loan, and other pertinent information.

A pre-approval letter does not necessarily mean you are approved for a loan. The letter is a statement saying that if all of your information is in order, you have enough money in the bank for all other fees, and the home you choose passes inspection and appraisal you will get your home loan. However, with a pre-approval letter, sellers are more willing to work with you since they realize you have the power to buy.

With a pre-approval you will be able to negotiate better with sellers and save money. The reason is the seller knows you have the money to buy instead of working with those that have not applied for a loan. Why negotiate when the person may not be approved?

If more than one person has put their bid in on a home, the person with a pre-approval letter will have better chances of getting the home than a person that still has to find a home loan.

This entry was posted on Saturday, May 3rd, 2008 at 11:30 am and is filed under San Diego Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.