The definition of a process is; a systematic series of actions directed to some end.
The home buying process has many actions, all important to obtain the end goal of buying a home.
One of the first and crucial actions in the home buying process is to get pre-approved from a mortgage lender. Yet, many put this off. Why? I've heard many reasons; I know what I can afford, I don't want my credit score to go down, I know my credit is great, I'm afraid, I don't know any, etc.
The pre-approval is essential and makes sense!
Why? Here are just a few reasons:
1. You'll have a clear understanding of what it costs to buy. From closing costs, title fees, current interest rates and down payment options. You can estimate online, but those are general. Every state and even city has different transfer taxes and interest rates do fluctuate based on credit scores.
2. You'll get updated credit report. How often do you check your credit report? Most people rarely look at their full report. What if there is something on there that has reduced your score and you had no idea!? This unfortunately happens more often than you think. Plus, mortgage lenders use a different credit score system. So that FICO score you get every month from your bank, may be different from what the bank gets.
3. You can not submit an offer on a home without a pre-approval letter! I think that's the biggest reason of all... what's the point of looking if you can't buy!
4. You'll know what you can afford. Maybe you can afford more than you think. Or maybe less. If you're looking at homes for $225,000 just based on your own calculations, maybe you could actually afford up to $275,000! That extra $50,000 could get you another bedroom or larger backyard you wanted.
If you're goal is to buy a home, you must take the necessary steps. Having the right team- Realtor and Lender- will make the process less scary and more fun!