Mortgage Pre-Approval: What Is a Pre-Approval Loan & Why Should You Get One?
Mortgage pre-approval is a great way to get an idea of the purchase price of a home that you can qualify for before you start looking for your dream home. Getting pre-approved for a mortgage is a smart first step in the home buying process!
If you have an idea of what type of home you want but haven’t started looking yet, a pre-approval will help speed up the process when it comes time to find a new place. Getting pre-approved means lenders have already reviewed your financial situation and determined that you could afford a home at a certain price point. That makes it easier for you to shop around without having to worry about whether the house is within your budget!
What is a mortgage pre-approval?
Mortgage pre-approval is the process of getting a commitment or an opinion from a mortgage provider to lend a certain size mortgage at a particular rate. When you get a mortgage pre-approved, you’ll find out the maximum amount you can afford to spend on a home and what interest rate you qualify for.
Applying for a mortgage pre-approval is free and doesn’t commit you to a lender. However, getting pre-approved does hold the mortgage rate you are offered for 90 to 120 days. This means that if interest rates rise in this period and your lender raises its rates accordingly, then it may not be possible to take advantage of the lower rate with another lender if necessary.
What is a pre-approval letter?
A pre-approval letter is an in-principle intention or commitment from a lender to lend you a certain size mortgage at a certain rate. The letter shows that you qualify for the loan amount, which makes it easier for you to shop around for the best deal on your home.
This is an important step in the home buying process that can help you determine how much you can afford, and it doesn’t cost anything. It also helps to give you peace of mind that the lender will approve your loan if you find the right house.
With so many options available today, there are many different types of mortgages available from which to choose. Some lenders offer fixed-rate mortgages while others offer variable-rate mortgages which allow homeowners to take advantage of changing interest rates as they fluctuate over time.
There are plenty of reasons to look for a mortgage pre-approval, it is important to get expert advice. We can help you with that – just reach out!