new york home loans

New York Pre-Approvals
Why Get a Pre Approval?

Most home buyers know they should get a mortgage pre-approval letter from a lender before they begin seriously shopping for a home. The reasons for this advice aren't always clear, and buyers sometimes are dismayed by the amount of paperwork involved. Here is some of the reasoning behind the advice:

  1. A pre-approval letter is more reliable than a pre-qualification letter. Getting a pre-qualification is easy. You just call a mortgage broker or lender, provide some basic financial information, then wait a few minutes for the letter to come through your fax machine. Getting a "pre-qual" from a Web site is just as easy. Enter some information, click "submit" and there you go. A pre-approval letter, on the other hand, involves verification of all the information, rather than taking your word on faith, the lender will ask for your documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Yes, a pre-approval is more time-consuming than a pre-qualification but the benefits are defiantly worth it.
  2. You'll know how much money you can qualify to borrow. Most home buyers have a general idea of how much they would feel comfortable paying every month on their mortgage. However, there's no quick-and-easy way to translate that monthly payment into a specific maximum mortgage amount because other factors, down payment percentage, mortgage insurance, property taxes, adjustable interest rates and so on, are all part of the calculation. And, you might not be qualified to borrow as much as you think you should be able to borrow, depending on your income, your debts and your credit history.
  3. You'll have more leverage in negotiations with the seller. Home Sellers often prefer to negotiate with pre-approved buyers because the sellers know such buyers are financially qualified to obtain the financing they need to close the loan transaction. A pre-approval letter is an especially favorable to a seller, in a close multiple offer situation. And, you might feel more confident about making an offer with a pre-approval letter in hand and the knowledge that you'll be able to obtain a loan for the mortgage.
  4. Your real estate agent will work harder on your behalf. A pre-approval letter signals to your real estate agent that you're a well-qualified buyer who is serious about purchasing a home. (anyone who has ever dealt with a Realtor knows that most Realtors will not really start to house hunt seriously fro you until you have this letter). The increased likelihood of a closed sale, and a commission, will naturally motivate your agent to devote more time and energy to you.


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