Maurie Backman | USA Today – The Motley Fool | mortgage guarantee
There are certain steps it pays to take when you embark on a home search. You should spend some time interviewing real estate agents, make a wish list of the home features you’re looking for, and get pre-approved for a mortgage. Some buyers, however, don’t take that final step, either because they don’t know about it or because they don’t understand how it works. Here are a few things you should know about mortgage pre-approval.
1. Getting pre-approved for a mortgage doesn’t guarantee you a home loan
You might assume that if a mortgage lender pre-approves you for a home loan, you’re automatically guaranteed that mortgage once you’re ready to sign it. But that’s not the case. Mortgage pre-approval is not the same as getting an actual mortgage, and if your financial circumstances change between the time you’re pre-approved and the time you want to apply for a home loan, you may be denied.
Still, getting pre-approved is a step in the right direction. And if nothing changes for the worse, financially speaking, then there’s a strong chance you will get a mortgage once you want one.
2. It can make for a more efficient home search
When you go through the pre-approval process, a lender gives you a specific amount that you can borrow based on your income and the funds you have available for a down payment. Having that number is important because it can help you avoid looking at homes that are outside of your price range.
3. It could help you beat out another buyer in a bidding war
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