Seeking mortgage preapproval (or prequalification, as some lenders say) before you start looking at houses will help you figure out how much you can borrow. This lets you know what price range you should look at. It also lets sellers and realtors know that you are serious and ready to buy. In this fast-paced market, being preapproved is a must. Without a preapproval letter, your offer will likely lose out.
How Long Does Mortgage Preapproval Last?
When a lender preapproves a mortgage, the offer is valid for a specific amount of time. Usually preapprovals are good for 30 to 90 days, but sometimes as long as 180 days. If you get a mortgage preapproval and the offer is good for several months, you should have time to look at numerous houses and carefully weigh your options without feeling rushed. If it is only good for a lesser amount of time, make sure you know the areas and neighborhoods you are wanting to view.
A lender may agree to lock in the interest rate it quotes you. That means that even if market conditions cause interest rates to rise before you buy a house, you will keep the interested rate quoted. This is an awesome benefit some lenders offer. Inquire about this when shopping for your lender.
If your preapproval expires before you’re ready to buy a house, you can contact the lender. Extensions are sometimes possible. The lender may require you to submit up-to-date financial documentation.
Get Preapproved Early and Improve Your Finances
If your credit score is marginal or you have a high debt-to-income ratio, you may be disappointed when you see your mortgage preapproval. You may find out that you don’t qualify for enough to buy a house in the price range you want. Learning that several months before you plan to buy a house can be helpful.
It can give you an opportunity to work on paying down debt and raising your credit score. Then, you can apply for preapproval again. You may qualify for a large enough loan to buy your home. If, on the other hand, you don’t seek mortgage preapproval until right before you want to buy a house, and then you find out that you can’t get the loan you’re hoping for, you may have to buy a less expensive home or put off a purchase for several months or longer.
You may have to make a large down payment to qualify for a mortgage with a competitive interest rate. If you find that out well before you intend to buy a house, you will have time to work on building your savings or exploring other options such as gifting.
When to Get Preapproved
Get preapproved right before house hunting. This works for people who are aware of their financial situation and know where they want to buy. Unsure of your finances? Or maybe you need time to look around. You may want to seek preapproval several months before buying.
If you’re needing help finding a lender, contact me! Preapproved and ready to look for the perfect home? Contact me and we will start your process!
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