A Mortgage Pre-Approval serves two purposes:
1) It allows the buyer to determine what price range they should be looking in, how much their mortgage will be and a sense of confidence that if they find a house they like they are in a position to place an offer on it and get a mortgage. Some buyers go out looking at homes with out doing this step and then find out they can't get a mortgage for a home they fall in love with.
2) It is required when an offer to purchase is made on a home. The Seller wants to know that the buyer has done the preliminary steps to get a mortgage. Most listing agents will not even talk with a seller about an offer without getting a copy of the buyer's pre-approval.
Getting a Pre-Approval is Easy
Typically, a Pre-Approval can be given after a 15 minute phone call to a mortgage rep. The rep will go over all your finances (income and debt), pull your credit and then crunch numbers. They'll typically call you back within 24 hours letting you know what type of mortgage you qualify for and what your max price range is. They will also issue you a pre-approval in writing that will be needed if you wish to make an offer on a home.
Sometimes a potential Lehigh Valley Home Buyer will use an on-line mortgage calculator to determine what they feel they can afford. They will use these numbers as a basis for searching for a home. This is a bad way to do it. For instance, a home buyer may be financially able to purchase a home but if their credit score is 500 they aren't going to be able to get a mortgage.
In addition, there are different type of loans available such as FHA, VA, USDA and Conventional. Every one of these loans has different guidelines and what is acceptable for credit scores and income/debt ratios.
A Pre-Approved Home Buyer is an educated Buyer that knows their finances and what they can afford.
I know some really good mortgage reps. Contact me if interested in talking to one of them.
For all of your Lehigh Valley Real Estate information, visit www.lehighvalleyhomesonline.com.