If you plan on buying a home in the near future, you'll likely need to also start shopping for a mortgage. Here are some tips that will help you secure the financing for one of the biggest purchases you'll ever make.
Get Pre-Approved Before You Start Browsing Homes
Think you don't need to get a mortgage pre-approval? You may be surprised at how quickly things can come together. When the day comes that you finally find a home you like, you'll need to act quickly to get a pre-approval letter so that your offer letter to the sellers is very strong. Without that pre-approval letter, you may not be able to submit a winning offer on the home.
The problem is that you never know when you'll find your dream home, and when it's a seller's market, you need every advantage you can think of. Get that pre-approval done so that you're good to go with making a solid offer.
Work With Multiple Lenders
It is always a good idea to work with multiple lenders from the start. You don't know how easy a lender will be to work with until you actually start working with them. In addition, different lenders are going to offer you different rates. When you finally find a home that you want, you can compare rates between your favorite lenders and then lock in the rate that is best. Don't feel like you have to use a specific lender just because you got a pre-approval through them.
Know that the mortgage underwriting process can be quite long. There will sometimes be weeks that go by where you don't even hear from your mortgage lender. That's why it's important to be patient during the process. Your lender should check in with you to let you know if you're still on track to meet your closing date, and help move things along to ensure that the mortgage is approved by then.
Avoid Big Purchases
Many people make the mistake of opening up a new line of credit during the mortgage pre-approval process, which can hurt their chances of having the loan approved. This often happens if people make big purchases in preparation for their new home, such as buying furniture, appliances, or home improvement products. In some situations, people may also buy a new car to prepare for their new commute to work. Anything that changes your credit history can cause the mortgage lender to reconsider a mortgage because the increased spending looks like unpredictable behavior.