A mortgage pre-approval can be an important part of your pathway to building wealth, giving you a real-world picture of your options: that is, your opportunities as well as your limitations.
A mortgage preapproval will tell you how much you qualify for (you may be pleasantly surprised), what your mortgage payments will be, and you’ll get an interest rate that will be held for a specific time period, like 120 days.
If you are purchasing a new home, then you’ll be shopping with a full wallet! You’ll know exactly what you can afford. You want to avoid reaching too far financially for a house you’ve fallen in love with, but you may also discover that you’re ready for the house of your dreams and didn’t know it. A mortgage pre-approval tells you that.
In other words, a mortgage preapproval is always a good idea. Remember, of course, that a preapproval isn’t a mortgage approval. Make sure you have a financing condition in place when purchasing because your property needs to be assessed by your lender during the mortgage approval process. You’ll need to provide the necessary information such as the offer to purchase, MLS listing, and any other documents required by the lender so they can assess the property.
Additionally, any planned financing might fall through if your circumstances change. So be careful with changing jobs, adding debt or missing payments, co-signing another loan, or using your downpayment money. You want to keep your financial situation squeaky clean while you’re getting ready to finance.