Apply for a loan and obtain loan approval BEFORE you start looking for a home to purchase.  Make sure that your lender provides you with a loan approval and not just a pre qualification letter that is not based on your over financial status including income and credit rating. Why?

Loan Pre-approval will help you in the following ways:

It is always advantageous for a loan approval letter, from a lender, to be submitted with the purchase offer. The seller will take you more seriously. This removes any doubt that the seller may have that your are qualified and serious. Many sellers won’t even entertain your offer without it because they want to be certain that you will be able to get the loan that you need. The property will be taken off the market, by the seller, for several weeks when the offer is accepted and other qualified buyers will probably have moved on.

Make sure that you get a loan approval and not just a pre-qualification letter. Pre-Qualification letters, that are not based on a thorough credit analysis, are not worth much and will not help you get your offer accepted. Shop around, with various lenders, for the best terms and type of loan. Don’t overlook lenders that are not associated with a bank. Check with your credit union and others. Your REALTOR® should be able to help you with locating a lender that fits your needs.

Don’t overlook free money! Check to see if there are down payment assistant programs that you may qualify for.

Generally, interest rates are locked in for a set period of time. You will know in advance exactly what your payments will be on offers you choose to make. (GFE from Lender)

You will avoid the disappointment of falling in love with a home only to have someone, with a pre-approval, beat you to the punch with an offer and get accepted, even though their offer may not be as high as yours. The seller wants as much certainty as possible that there won’t be any problems or delays because you need to clear up some issue or you just can’t get loan approval.

You won’t waste time considering homes that are out of your price range.

A seller may make concessions in price or contributions to your closing costs if they know that your financing is secured. You are like a cash buyer, and this will make your offer more competitive. The seller knows that the sale will close on time and without a lot of problems and will save them money.

You can select the best loan package, and lender, without being under pressure by doing this ahead of time. Don’t wait until you find a home that you love to start the loan approval process. Your monthly payment will depend on your credit rating, the term of the loan, and the type of loan so take a look at all of your options.

Your closing will happen sooner and with fewer headaches.