Approval Reson for loan

Learn why home loan pre-
approval is one of the smartest
moves you can make when
shopping for a house.
You wouldn't head to a cash-
only farmer's market or craft fair
without knowing how much cash
you had in your wallet. So why
would you start shopping for the
biggest purchase of your life, a
new home, without knowing how
much you could spend?
Fortunately, knowing how much
you can spend is easy: Get pre-
approved for a mortgage before
you start any serious home-
shopping.
Here's why getting your loan
pre-approved is so important:
The pre-approval process
establishes an all-important
relationship between you
and your lender.
Getting pre-approved tells
you the maximum the
lender is likely to loan you,
which helps you narrow down
your home search to
affordable properties.
You can get an idea of what
your monthly payments
would be.
You'll have more credibility
with real estate agents and
with sellers if your loan is
pre-approved. Some agents
won't take you seriously until
you have the pre-approval.
They don't want to waste their
time, or yours.
Mortgage loan approval
takes time. If you wait to
apply until you're ready to
make an offer, you could lose
out on the home to someone
who is pre-approved.
The lender often will lock in
an interest rate, which
protects you if rates rise while
you are shopping for a home.
If your circumstances don't
qualify you for a low
interest rate, you'll know
that going in. You might
decide to look in a lower price
range to make up the
difference.
Pre-approval gives you at
least some peace of mind,
which you will appreciate
during the often-stressful
process of buying a home.
Don't confuse loan pre-approval
with pre-qualifying for a loan.
Lenders will often pre-qualify a
would-be buyer based on what
you tell them about your
income, employment and basic
credit information, like how
much you currently owe on
credit cards or other loans. The
lender is not agreeing to loan
you money or committing to an
interest rate. But the process can
tell you whether it makes sense
to move forward in your home
search.
Loan pre-approval is a more
formal process. You'll need to
provide the lender a lot of
information about yourself,
especially about your spending
and saving habits. Prospective
lenders will generally make
inquiries into your credit history
and obtain your credit score.
If you get pre-approved, you'll
receive a letter telling you the
maximum loan you can get and
the interest rate you'll qualify
for. In some cases, you can lock
the interest rate in. Be sure you
understand whether the interest
rate is locked and when you can
lock it when you get the pre-
approval.
That pre-approval letter gives
you a lot of power as a home
buyer. Use it wisely.