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The Mortgage Pre-approval Letter: Why It's Important and How to Get One If you are thinking about buying a new home in the near future, you may already be searching online to get a feel for the different types of homes available in the local area. You may have reviewed your budget, and you may have a fair idea about a sales price that is comfortable for you to afford.

While you may feel as though you have taken the preliminary steps necessary to prepare yourself to buy a home, it is important that you also get a mortgage pre-approval letter for your financing before you starting hunting for that perfect new house or condo.

The Importance of a Pre-Approval Letter

A mortgage pre-approval letter is issued to a loan applicant after he or she has passed through a preliminary credit review process. Most of these letters state that the individual is pre-qualified for a property with a maximum sales price, and it is contingent on the loan applicant providing supporting documentation, such as tax returns and bank statements.

This letter gives you a better idea about what it will take for you to get final loan approval and what loan amount you may qualify for. The letter is also provided to a seller, and it gives the seller the confidence that comes with knowing that you are a qualified buyer. When a seller has an offer from a buyer with a letter and another offer from one without a letter, there is a good chance that the seller will opt for a buyer who is already pre-qualified for financing.

How to Get Your Pre-Approval Letter

As you can see, there are several reasons why it is important to get pre-qualified for your mortgage financing. Getting a pre-approval is generally a straightforward process, but it can seem intimidating. You will need to complete a loan application, and this may be done in person or online with a lender or mortgage company. You will also need to sign an authorization for the lender to pull your credit report. After taking these steps, you typically will be able to receive a pre-approval letter within a day or two.

When you have plans to purchase a new home, you likely will need to apply for financing in order to complete your plans. Getting a pre-approval letter up-front can help you in a number of ways, and you can easily take the steps necessary to get pre-approved for your mortgage. Simply contact a mortgage company or lender today to get started with the process.

Three Tips for Reducing Your Closing Costs if You're Buying a Home in the Spring Spring is aproaching fast and it is usually the busiest time of the year for home buying. After a long and cold winter, many people are ready to enjoy the nicer weather and begin to shop for a new home. Spring is also the perfect time for home buying for families with children because it allows them to move during the summer without interrupting school.

Home buying has costs associated with it other than the mortgage itself. Known as closing costs, these fees are a part of the home buying process and they are due at the time that the mortgage is finalized. Buyers, however, can negotiate these costs and reduce the expense with a little bit of effort and with the help of a good mortgage professional.

If you are thinking of buying a new home in the spring here are three helpful tips to reducing your closing costs.

Compare All of Your Mortgage Options

If you’re using mortgage financing to cover some of the up-front purchase cost of your home you’ll have other closing costs to pay including lender fees, mortgage insurance and more. Be sure to compare all of your options with your trusted mortgage adviser to ensure that you’re getting the best possible deal and paying the least amount in fees and interest.

You may also be able to save a bit on your closing costs by choosing a “no points” mortgage. In this type of mortgage you’ll end up saving on closing costs but you’ll be left paying a higher interest rate. Spend a bit of time doing the math to determine the best course of action.

Third Party Fees

Some of the closing cost fees will be associated with third party vendors that must perform required services. Home appraisals, title searches, and costs for obtaining credit reports are some of the items included in this area. While these may be a little harder to negotiate because the lender uses specific companies to perform these services, it does not hurt to ask if you can use your own appraiser or title search company.

Zero Closing Cost Mortgages

Buyers may also wish to inquire about a no closing cost mortgage. This type of mortgage eliminates all closing costs. The lender covers all of the closing cost fees in exchange or a slightly higher interest rate on the loan. In most cases the increase is less than one-quarter of a percent. This type of loan can be very helpful to buyers. Buyers can then use the money that they saved on closing costs to help with the move.

With a little preparation, you can find the best mortgage product for the up-coming spring season. Be sure to contact your experienced mortgage professional, as they will be able to help you find the right mortgage for your specific needs with the lowest out-of-pocket expenses.

Compare All of Your Mortgage Options

If you’re using mortgage financing to cover some of the up-front purchase cost of your home you’ll have other closing costs to pay including lender fees, mortgage insurance and more. Be sure to compare all of your options with your trusted mortgage advisor to ensure that you’re getting the best possible deal and paying the least amount in fees and interest.

The Mortgage Pre-approval Letter: Why It’s Important and How to Get One

Three Tips For Reducing Your Closing Costs If You’re Looking Forward To Buying A Home In The Spring

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