When it comes to buying a new house, the most significant step in the process is to get prequalified for a mortgage loan. Since the home loan industry is always changing mortgage guidelines, it is hard to know if you are approved for a mortgage without submitting an application. By getting preapproved for a mortgage loan upfront, you are taking the guess work out of the equation.

Many Realtors want to know that their clients are preapproved for a mortgage loan before starting the house hunting process. Some Realtors go as far as not working with any client who is not preapproved first. It is crucial for the future homeowner to know that getting preapproved first is the most significant step in the house buying process.

Why get preapproved first? For starters, completing a loan application will let you know where you stand now. If there is a credit error, you still have time to correct the mistake. A preapproval will also let you know what down payment is required, what your monthly mortgage payment will be and the maximum sales price of a property you qualify for. These are important things to know when looking for a house.

Credit Issues

Most people do not know what items are on their credit report until it is too late. By submitting a mortgage application first, if there is any negative or incorrect information on your credit report, you will have time to repair the issue. Most credit repair companies take up to 45 days to correct inaccurate information. It can take up to 3 to 6 months to get all three bureaus to update with the revised information, so by starting the preapproval process first, if there is a mistake, you will have time to address the problem.

Know Your Down Payment Requirement

A preapproval will let you know the required down payment to buy a home. Since there are several different loan programs from FHA home loans to conventional home loans with each requiring a different amount for a down payment, it is crucial to know how much money you will need for the house closing. This will also give you time to prepare for the closing by saving money for the down payment.

Know Your Monthly Mortgage Payment

Preapprovals also give you an idea of what your monthly mortgage payment will be. This will help you set up a budget and prepare for the house payment. Also, a home loan consultant can help you with mortgage options that can affect the monthly payment.

Know What Your Can Buy

The most significant part of the prequalification is knowing how much you can buy a property for. You need to know what the maximum sales price of a house you qualify for. This way, you only are looking for houses that you can afford.

Let The Seller Know You Are Serious

By getting preapproved for a loan upfront, you are letting the seller know you are a serious buyer. If there are two offers to purchase a property and one offer has a preapproval letter, the seller is most likely going to accept the offer with the preapproval letter. By being a preapproved buyer, you set yourself apart from those that wait until the final moments to get approved for a mortgage loan.

By talking with a home loan consultant and getting preapproved today, you will have a better idea of where you stand in your home purchasing process.

David White is a Senior Mortgage Specialist who assists customers with purchase home loans. David has over 12 years experience with mortgage loans and understands the loan industry.