Burlington Vermont Real Estate: Should I Get Pre-Approval For A Mortgage?
Few people can buy a home for cash. Most buyers, especially first-time purchasers, require a loan or mortgage as it is more commonly referred to in order to purchase their new home and property. Real estate financing is not just about getting a loan, it’s about getting the loan that’s right for you – the mortgage with the lowest cost and best terms from a solid financial institution.
Get a Preapproved Mortgage
Start the mortgage process well before bidding on a home. REALTORS® can often recommend a mortgage source, or a mortgage broker who’ll shop around for you. There are many mortgage options and lenders so it pays to shop around. By meeting with lenders – either face to face or online – and researching loan options, you will find which programs best meet your needs and how much you can afford.
Preapprovals are also recommended for another reason: purchase forms often require buyers to apply for financing within a given time period. By meeting with loan officers in advance and identifying mortgage programs, it won’t be necessary to quickly find a lender, do a check credit and rush into a financing decision that may not be the best option. Most Sellers these days will ask if the buyers have been pre-approved prior to even showing them their homes. They want to ensure the buyer(s) are financially capable of purchasing their property. In addition, when making an offer, buyers will certainly ask for a pre-approval letter. Be sure to start this very early on so you know how much house you can afford.
What is Preapproval?
“Preapproval” means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a preapproval letter, which shows your borrowing power. You can visit as many lenders as you like and get several preapprovals, but keep in mind that each one does a new credit check, and too many credit checks could adversely affect your credit rating.
Although it is not a final loan commitment, the preapproval letter can be shown to listing brokers when bidding on a home. It demonstrates your financial strength and shows that you have the ability to go through with a purchase. This information is important to owners since they do not want to accept an offer that is likely to fail because financing cannot be obtained.
How Do You Get Preapproval?
Real estate financing is available from numerous sources, including mortgage brokers, mortgage companies, banks and online lenders. I can even suggest one or more lenders that are known to offer competitive programs and deliver promised rates and terms.
To get preapproval you must complete a written application and provide supporting documentation, such as recent pay stubs, rental checks and tax returns for the past two or three years if you are self-employed. During the prequalification procedure, a loan officer will describe the type of paperwork required.
A loan officer will carefully review your financial situation, including your credit report and other information, then suggest programs which most closely meet your needs
Doing your legwork and researching mortgages and lenders ahead of time, and getting a preapproved mortgage gives you a clear idea of what you can afford, tells sellers you are serious and means that you don’t have to rush the financing once you find a home that you want to buy.
If you are considering buying a home or condominium in or near Burlington Vermont, please visit my website, give me a call on my direct line at 802.238.5256 or email me to discuss representing you, our current market conditions and your needs/wants in a new home and community. I would be delighted to assist you.
Armed with solid numbers, buyers and sellers alike can manage their expectations and the current realities of our local market.
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