Get Pre-Approved for a Mortgage Loan
Benefits of Getting Pre-Approved
A pre-approval letter can be a big advantage--especially in a hot market where the seller receives multiple offers. If it comes down to your offer and another potential buyer, and the other buyer is pre-approved for a mortgage loan and you aren't, a seller will naturally lean toward the other buyer because getting pre-approved shows a seller that the buyer is serious about (and financially capable of) buying the home.
Another great thing about getting pre-approved and knowing how much you're able to spend on a home is that you don’t have to borrow the full amount that you’ve been pre-approved for. If you find a home that costs less than the max amount you're approved to spend, you can still purchase that home and have less to pay back!
While it may be tempting to use credit cards and open new lines of credit to buy things for your future home, don't!
Lenders don't just check your financial situation before you get pre-approved, they may choose to do so throughout the home-buying process and definitely before closing. They will check to see if (or how much) your credit history has changed and if has changed for the worse because higher card balances, new lines of credit, or even a salary decrease could cause you to lose the loan at worst or have to pay a higher interest rate at best.