With the Fed keeping interest rates stagnate, there could be more buyers in the market while interest rates remain low. However, predictions vary in whether or not the current seller’s market will continue. Many believe there is a shift on the horizon, but it is too soon to tell. For home buyers who are not cash buyers in any market, you can get the ball rolling by getting your loan pre-approved and increasing the seller’s confidence in you.
Why does a seller need confidence?
Cash buyers are a sure thing, and the mortgage process is not going to hinder the sale. On the other hand, if a buyer is going to use a mortgage to purchase the home, there are a number of things that can stall the sale. Proving income from self-employment, unknown liens against a property, and debt problems can stall or stop the mortgage process. Additionally, you must figure out how much you can afford and how much banks are willing to dole out. This is a complex process that may take a week or many months. Sellers want to know that you are ready to start the buying process, so they don’t have to wait for their house to close. Many home sellers are picking up a new mortgage, so they may not want to wait until you are pre-approved to sell their home.
How do you get pre-approved?
1. Check your credit:
If you need help getting your credit score increased, start with the basics. Make sure you are making payments on time, and make sure you don’t have too much debt compared to your assets. If you have debt problems, speak to creditors about your options. They may be able to lower your interest rates or give you a lower pay-off amount provided you pay in full.
2. Choose a lender:
There are many lenders from which to choose. Once you know you have your credit rating up to par, and you are ready to look for a lender, make sure you check out a few. Compare their rates and read their contracts, and choose a lender who you feel you can trust. You may want to refer to the advice of friends and family.
3. Provide the information needed:
You’ll have to give your potential lender your financial information in order for them to pre-approve. This means income information, debt information, credit scores, etc. The lender will go over everything and evaluate you as a financial risk. Then, they will pre-approve you for a certain amount. This is not the amount you must spend on a house, but it is the amount they feel that you can afford and the amount they are willing to provide.
Once you are pre-approved, you will still have more work involved in securing the mortgage, but your seller will know that you’ve already covered the basics, and it is likely that they will be paid in a timely manner.