Posted On: Tuesday, May 29, 2012 - 6:00am | Posted By: Eileen Bermingham
The holiday weekend is behind us, and that means many buyers will be either entering the home buying market, or may already be out there looking for their next home.
If there's one key piece of advice I can give to all of you, it's that you should get fully preapproved for a loan before you start seriously searching for a property. Of course, it's a good idea to get your feet wet and go to some open houses to get a sense for pricing and value. But before you start making appointments to see homes, the very first step should be that phone call to the mortgage broker or lender. Because if you don't have a clear understanding of the loan amount for which you can qualify, you could end up wasting a lot of time.
And by "preapproved," I don't mean a short phone conversation with a lender wherein you tell him or her your salary, estimated credit score and assets. I mean that you will need to assemble and submit all the required documentation (read my<a href="http://www.insidesfre.com/what-youll-need-to-get-your-loan/"> recent post here</a> that outlines the details) and have someone at the bank give the package a thumbs up. Without that bonafide approval, you could run into issues that could derail the purchase of the great house on which you just went into contract.
Your lender should also outline what your mortgage payment will be, incorporating property taxes and HOA dues (for a condo). And make sure that if you're considering a loan that will have an adjustable rate, you'll potentially be in a position to handle a larger mortgage payment if the interest rate rises when the loan adjusts. These days, it's all about fixed-rate products.
The market is moving very quickly, with offers due a day or two after the first open house in some cases. If you're a serious buyer and are ready to write an offer, you'll have sufficient time to review disclosures and comparative sales. However, there won't be time to assemble 15 pieces of financial documentation and have them reviewed by a lender. It's best to get your paperwork in order now so you can write that offer when the time comes.