Home buying is unlike any other purchase. It is going to be rare for someone to have the ability to pay cash for a property. The most common way of purchasing a home is through some sort of financing – usually a mortgage. A mortgage is something that enables people to finance a home over a certain length of time. The maximum time period of time that I have seen is 30 years, though there are many other options in between.
The Importance of a PreApproval
Like any other loan of money, your credit will be checked. If there is a little blemish on your credit, it is better to get this checked out and corrected before you find the home. It usually takes a month or more for the corrections to take effect on the credit score. Usually sellers are not willing to wait around to make sure you are creditworthy. It is not worth their time especially when the market is hot, because there may be another person around the bend that will have approved credit and will be able to move forward immediately.
Is It Really Necessary?
Oh, yes. It is necessary to get your preapproval before you go out to look; even if your scores are astronomical. You will be in a hurry to make the purchase because it takes about 30 days until closing and during that time the bank is doing most of their work to bring about the closing. You don’t have 30 days to shop around for a mortgage. You need to know beforehand what financial institution you are using. Take your time up front to figure out what route you want to travel with your mortgage. There are so many options, flavors, and varieties that if you try to make a decision in the heat of the moment, you could end up making a decision that is not in your best interest in the long run.