Buying a new home can be an exciting journey. However, as with any other journey, buying and moving into your new home can can also be a daunting task. The key is to be prepared in order to make the process as smooth and satisfactory as possible. So how can you be prepared in your home buying process?
When you step into the market with a serious intention to buy a home, there are a few things that you should do in preparation for what’s to follow. Before hiring a real estate agent and registering with online listing portals, you should approach a home financing company and initiate the pre-qualification process. This important first step in the home buying process will give you a more accurate assessment of your financial status so that you can make a smart decision about the price range you can afford as well as determine how much money you can borrow comfortably. Often times, the pre-qualification step is neglected during the home purchase journey, despite the fact that skipping it can result in unwanted interruptions or last minute changes when you do find the house that you love. Here are three reasons why pre-qualification is a critical step in your home purchase process.
1. Accelerate your home purchase with a pre-qualification letter
Before you begin to search for a home, you should get pre-qualified for financing. There are different options when it comes to receiving financing so doing the necessary research to understand the home financing process and what each institution offers will help you make a decision that better suits your lifestyle and financing expectations. Once you make the choice of your home financing provider, getting pre-qualified will be a simple process. You will only need basic information such as your annual income and the amount you intend to allocate towards a down payment. Typically, no documents are required to get pre-qualified, and often times more than none, you can complete the pre-qualification process on the home financing provider’s website.
2. Assess your current financial position
Once you are pre-qualified for financing, you’ll have a more realistic assessment of your financial position. Use the information in your pre-qualification letter to compare to your current financial obligations. Before you are approved for a loan, home financing providers will check your credit score and affordability range to determine how much you can afford to pay on a monthly basis without compromising your current commitments. Being aware of your financial position before getting to the point where you apply for home financing will help you to make an estimate about what you could potentially receive from a home financing provider as well as give you an idea about what price range you should be targeting when you search for your home. Ultimately, knowing your financial positon can prevent you from wasting time or searching for a home that you cannot afford.
3. Get an edge over other buyers
If you are looking for a home in a competitive market, odds are, you will be contending against several prospective buyers. Making an offer without a pre-qualification letter can hurt your chances of being considered. Sellers need to make sure that you are a serious buyer, and these days, they require that you have pre-qualification letter before making an offer. If you have your pre-qualification letter ready, the seller will identify you as a committed buyer and give preference over other prospective buyers who may not have a pre-qualification letter.
These three tips can ensure that you are the most prepared for your home purchase journey.