Why Get Pre-Authorised For An FHA Dwelling Mortgage?
Why Get Pre-Approved for an FHA Mortgage? This is a question some first-time home buyers ask, and the answers can make a huge difference in how you approach your home loan.
The FHA home loan pre-approval does not put you under any mortgage
When you fill out the home loan pre-approval forms, you are not making a commitment in the sense that you are financially obliged to buy. The borrower is not legally obliged to make a purchase upon pre-approval.
Pre-approval of a home loan actually helps you get serious as a buyer when you find a home that you are ready to commit to.
The buyer takes a pre-approved borrower more seriously and you may find that a pre-approval letter (depending on the housing market) is really the only thing that will allow you to get a reputable offer.
This is different for those who pay cash for a home, but when applying for a mortgage loan, pre-approval is an important factor. Some sources claim that more than 40% of all those looking for a home start looking for a home without prior authorization.
This means that when you come to the seller as a pre-approved borrower, you have a potential advantage over those competing with you for the same property.
If pre-approval for an FHA mortgage makes all the difference between buying the home or missing out on someone else, it is a very good idea to explore.
FHA home loan pre-approval will help you understand how much loan you can afford
Do you know how much the houses cost in the housing market you have chosen?
And by comparison, how much credit can you afford to apply for it? Looking for a home without knowing your price range can be a problem, especially if you don’t know how taxes, insurance, and other factors affect your monthly mortgage payments.
Pre-approving a home loan takes into account the estimated price of the house, interest rates (in general), the amount of the down payment, and other factors.
You want to know the average price range that you can afford (in the eyes of the lender) and start your home hunt with these numbers in mind.
What it takes to qualify for a home loan
To pre-qualify, you need information about your income, a list of your employers (the lender must have two years of income, but not necessarily with the same company), and you want to come to the pre-approval process with consistent pre-approval or increasing income over the past two years.
You should not attempt to pre-qualify for a mortgage loan if you have had a bankruptcy on your credit history in the past two years (more than two years of age may be acceptable depending on the circumstances) and no longer has the mortgage payment you wish to make than 30% of your income.
This percentage can vary depending on the lender, so it is best to ask about that lender’s standards.
Before pre-qualifying for a mortgage, try an online mortgage calculator to determine your estimated payments and get a good price range for the houses that you want to consider when looking for a home.