Blog Buyers Guides Ready to buy your first home?

Ready to buy your first home?

Updated: 08/28/2022 • Bernie Gilchrist

Buyers Guides

Buying your first home can be challenging and scary. Knowing how and when to get preapproval for your mortgage can help you purchase the home you want once you find it. The real estate market here in Western North Carolina is hot and the home you fall in love with may enter a bidding war. The more you prepare and understand what type of mortgage you can receive the better you’ll be at the negotiating table.

If this is your first home purchase, then it’s important for you to understand what getting a preapproval for a mortgage means, what steps are involved, and how it will affect you and your family.

Home loan pre-approval says that you may be eligible for a home loan. Here are a few important details that you have to know about mortgage pre-approval before you begin dealing with a mortgage company, bank or any lender.

1. Pre-qualification is not the same as a mortgage pre-approval.
Pre-qualification and home loan pre-approval are totally different. The first one is a general confirmation that you meet basic requirements to receive a loan. No personal information or documentation is needed

2. Pre mortgage approval can affect your credit
When you apply for pre-approval, you will have your credit pulled by the mortgage lender to see whether you are creditworthy enough to receive a loan. This can affect your credit score, albeit only for a short time, but it worth it to know what you can and cannot do.

3. Getting pre-approved for a mortgage isn’t a guarantee of funding
Pay attention, this is probably the most important thing to know from the beginning. Many home buyers think that once they’ve been pre-approved, they’ll automatically be able to get a loan from the lender. This is NOT the case. Home loan pre-approval simply declares that you are in a suitable financial state to be making inquiries about home purchasing. Remember, there is no guarantee, no commitment to lend on the part of the lender.

4. It’s a process to get pre-approval for a mortgage
To get preapproved, you’ll have to fill out a loan application, provide the required documents, prove income status, and wait for the lender to verify your information. Of course, this process doesn’t have to take long. In fact, some lenders will do it on the spot or that same day, others however can take a few days or a week. Be ready and prepare for the process to take time. 

Today, you can even get mortgage preapproval online, without having to sit in an bank, talk on the phone, or go through a long application process with companies like Amerisave, Quicken Loans, Rocket Mortgage and LendingTree just to name a few.

What do I need for a Preapproved Mortgage in Western North Carolina?
You’ll need the following to get started:
- Your Debt to Income Ratio aka: DTI
- Your financial assets 
- Your credit history
- Your employment status
- Statement on how much money you have for the down payment

1. Establishes Credibility
Today’s economy requires agents and sellers to be cautious about their potential buyers. Brokers and agents won’t waste time on just anybody today, and a seller will not sit down to negotiate with someone unless they think they are serious. A home loan pre-approval letter signals to everyone that you are seriously interested, that you have already been in touch with a lender, and that you most likely have the finances to receive a mortgage loan.

A home loan pre-approval letter also makes you more competitive since sellers and agents will consider you before other candidates if it comes down to multiple people making offers at the same time.

2. Helps you know your strengths and weaknesses
Even if you don’t get a pre-approval home loan, the process is valuable because it shows you where your weaknesses lie. Getting a mortgage loan requires a fairly decent credit score, financial standing, and employment status. If a company rejects you for a pre-approval mortgage, they must tell you why. This information will help you clean up your credit, fix issues you have on record, and boost your appeal and chances. Once you know what to fix, you’ll be ready for the next time you shop for a new home.  

For this reason, we recommend going for mortgage pre-approval before you look to buy. It will give you a good insight into your borrowing status so that when you are ready to purchase your new home your credit score won’t get in the way of the process.

3. Helps you find the right home
In conclusion, a pre-approved home loan helps you narrow down your choices. This is because the preapproval will specify an amount or range that you are preapproved for. So, you can more easily find a home that is right for you knowing what your budget is and what you can afford.

We’re here to help.
If you need help finding a mortgage lender for your next home, just let us know. We have deep relationships with local bankers and loan offices right here in Western North Carolina and we’ll be happy to help you find and secure your new home. We do it every day! 

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