But before you venture off into La-La Land, remember that looking at homes isn't really the first step in thehome buying process, it's securing your mortgage pre-approval. There's nothing scary about obtaining your mortgage approval,it's painless, and best of all it's freeand it doesn't commit you to buying a home today(or any day for that matter).
You'd actually be at a disadvantage if you didn't obtain your mortgage approval before you start looking at homes. Here are the three reasons why:
- The lending guidelines are no longer relaxed and programs that were available years ago, have been scrapped today. You can't assume that just because you have a pulse, that you'll be approved for a loan. The lender will want to know how long you've been employed and what your credit score is. Mortgage programs and interest rates are credit score driven; the higher your score, the better your interest rate, and the lower your monthly payment. If your credit score is not where you'd like it to be, your lender can make recommendations on how to improve your credit score. You'll also need to know how much money you'll need for a down payment and closing costs.
- Special programs are available, and you need to know what they are. Getting pre-approved helps you determine the best program for your needs. Do you qualify for special first-time buyer programs? Are you active military and do you qualify for a VA loan with no down payment? Are you buying a home in a specific county or city that has special programs? Consulting with a knowledgeable, local lender gives you the benefit of working with someone who is aware of what your options are when it comes to financing.
- Are you limiting yourself? Are you strapping yourself? Some buyers think they can't afford a certain price range, and on the flip side, some buyers assume that they can afford a more expensive home when they can't. Getting your pre-approval means that you know exactly what price range you can afford.