Getting a Mortgage Pre-Approval

If you are on the market to buy a new home, condo, or even trailer home it will usually be a good idea to get pre-approved for a home loan before you start your search.  This will save you grief when dealing with a lender if you find a house you like and are turned down for the loan.  If you go into this with a pre-approved loan it will also let you know where you stand in terms of what you can afford and how much the bank is willing to lend you.

This is will of course revolve highly around your credit score.  Not very many people have six figures in their savings account to drop on a house just like that.  This is where you will need the help of a lender and they are going to put you under a microscope to make sure you are not going to be a high risk borrower.  They will check your past payments on previous loans, your debt to income ratio, and they will make sure you are not late on any of your current monthly payments to other financial institutions and obligations.

This can be a rigorous process that can be handled in a better fashion if you know what you are in for and are willing to take care of this ahead of time before you start your search for a new home.  If you have poor credit this does not mean that you will instantly be denied but it will mean the lender will instill a higher interest rate.  Many people do not know what they are getting into when they sign a contract for 10% or 12% on a six figure loan application.  People who are buying their first home are not aware that interest rates of this magnitude means that every month when you make your payments you are going to be doing nothing but paying off the interest.

This is why getting pre-approved and getting a good understanding of what you can afford and what the bank is going to do for is the best way to go about this.  It will also give you time to get some of your other debts handled before you sign a loan application with astronomical interest rates.