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Chicago Mortgage Overview
The mortgage application process can be exceedingly stressful. However, most people will have to go through it when they buy a home. Before you start looking for your new home, it's smart to get pre-approval. You'll have a better idea of how much you can afford to spend on a new home. This can save you time by not viewing homes that are out of your price range. It will also help you better negotiate the asking price for the home.
To get pre-approved, the first thing you need to determine is how much you are able to spend on your new home. This is determined by the pre-qualification process. You will have to meet with a mortgage lender and evaluate your financial situation. The lender will review your financial history and credit worthiness in regards to the amount you are looking to borrow. This service is usually conducted free of charge.
Being pre-qualified makes you more desirable to the seller. Although not legally binding, pre-qualification shows a strong desire to buy. Pre-qualification does not guarantee that a mortgage will be approved.
After the pre-qualification process, you should seek to obtain pre-approval. This process will solidify your position when applying for a mortgage. Pre-qualification lets you work with your lender to make pertinent financial inquires on your behalf.
During the pre-approval process, the lender will confirm your financial standing by assessing your home pay, investments, debt accruements, and any other matters of relevance. The lender is allowed to contact your employer, financial institution, and any additional references that can attest to your assets, holding, and debts. This is done to determine your credit standing.
You mortgage will be approved if you meet the necessary terms and guidelines. You will be provided with documentation, from the lender, that states your per-approval status. This will also include the amount of mortgage you've been pre-approved for as well as the length of the mortgage.
To cover costs associated with performing interviews, obtaining credit reports, and costs pertaining to other necessary applications, a up-front fee may be applicable. Many times these costs are reimbursed at the time of the property closing.
Preparation Works in Your Favor
Is the pre-qualification and pre-approval processes really necessary? Not entirely, but they can help increase your desirability to sellers and give you peace of mind, knowing that you have a guaranteed loan amount to spend on a new home. When you find the right home, you can act quickly and make an offer you can stand behind. You also won't have to spend extra time to close the deal by waiting for your loan approval.
As a buyer, you want to be as desirable to the seller as possible. Being pre-approved for a mortgage lets the seller know that you are serious about buying the property. This may make the seller more willing to negotiate the asking price because they know that it will result in a done deal.
There is much to benefit from by going through the pre-qualification and pre-approval processes. Buying a home is a huge investment. These processes will save you some of the hassle when you're shopping for a home. It a smart choice if you are serious about buying a home.
Note: Pre-qualification and pre-approval are contingent on the financial state and solvency of the individual. It is important to let your lender know about any significant changes in you financial standing between the time you are pre-approved and the closing of the home.