Thinking about buying a home in Santa Fe or Albuquerque? Before you even start touring listings with an agent, you'll want to figure out how you'll be paying for your home...and how much you can afford to spend. The easiest way to do this is by getting preapproved for a mortgage.
Preapproval comes with quite a few benefits, and it can actually be the deciding factor that helps you win in a bidding war. And best of all, getting preapproved is actually pretty easy. Let's take a look at what preapproval is and how it can benefit you.
Why Should You Get Preapproved?
In a nutshell, being preapproved means that a lender has reviewed your finances and cleared you to borrow a certain amount of money with set terms and interest rate. While preapproval isn't a 100% guarantee of what you'll receive when you officially apply for a loan, it's the most reliable way to gauge what a lender is willing to give you based on your financial history and income.
Upon preapproval, you'll receive a letter that states all the conditions of your potential loan. Your preapproval letter will show both agents and sellers that you're serious about buying a home. Here are a few more benefits that come with being a preapproved homebuyer.
You'll know exactly what you can afford
Because lenders evaluate your credit, income, and other financial factors, they'll tell you exactly how much money they're willing to let you borrow. When you combine this number with the amount you have saved for a down payment, you'll know what you can afford to spend on your new home. This will help you set a price range and stay on budget during your home search.
You'll gain an additional bargaining chip
In today's competitive market, it's crucial to take additional steps if you want to stand out as a buyer. Getting preapproved is one of the easiest and most beneficial things you can do if you want a seller to choose your offer, especially in the event of a bidding war. Sellers are more likely to go with a preapproved buyer because they've already been vetted by a lender. Preapproval also helps you close faster, which can be appealing for everyone involved in the transaction.
It speeds up the closing process
While being preapproved doesn't commit you to a specific lender, it can help speed up the closing process because they already have your paperwork on file. It also means you have one less thing to worry about as you navigate inspections, signing important documents, and other aspects of the closing. Remember—the more you do in advance, the less you have to worry about later on!
You can explore all of your options
Just because you're preapproved by one lender doesn't mean you have to stick with them! Shopping around for different lenders will help you secure the best possible rate and terms for your mortgage. You can even pit different lenders' offers against one another to negotiate a better deal. And contrary to popular belief, applying for preapproval more than once won't significantly decrease your credit score so long as you keep all inquiries within a 30-day period.
Ready to Get Preapproved?
If you're eager to get the ball rolling on your home search, here are a few steps you can take to get preapproved. If you ever have any questions, feel free to give us a call!
Start researching lenders
Now is the time to take a more in-depth look at possible mortgage lenders and shop around for the best deal. Banks, credit unions, direct lenders, and brokers are just a few of the options you'll have as you search for the right fit. You should also explore possible down payment assistance programs or loans backed by the government.
Take a closer look at your finances
Getting familiar with your finances will help you avoid any surprises and get a better idea of what you'll be able to borrow. If it's been a while since you reviewed your credit report, now is the time to do so. You should also gather any important documents a lender might need for preapproval, such as pay stubs, tax returns, W-2s, and asset statements.
Ask for recommendations
Even if you're not a first-time buyer, it's worth asking around for lender recommendations. Your agent may also have a list of preferred lenders that they like to work with. If you want to see as many options as possible, consider hiring a mortgage broker to apply for loans on your behalf and negotiate the best deal.
Your Dream Home Awaits...
Whether you have a few more questions about preapproval or are ready to kick off your home search, you can trust us to help you navigate the buying process from start to finish! Get in touch with us for all of your Albuquerque real estate needs—we look forward to helping you find your dream home.