The first step for many home buyers is applying for a pre-approval. Getting pre-approved before you even start looking for homes ensures that you aren’t falling in love with a house you really can’t afford. Unfortunately, there seems to be quite a few misconceptions about pre-approval that confuse potential home buyers. In this week’s article we are going to dive into that misinformation so that you can make more informed choices. Here are 5 pre-approval myths you may have heard and the truths you may not know:
Myth: Pre-approvals last forever
Pre-approvals allow you to lock in a rate for 120 days. That gives you about 4 months to find a home.
Myth: Getting pre-approved will hurt my credit score.
It is true that pre-approval requires lenders to pull your credit report. However, credit bureaus understand that homeowners will hop around for the best rate. In most cases, multiple inquiries within a certain time period will be treated as one, big credit pull instead of multiple smaller ones.
Myth: Getting pre-qualified is the same as getting pre-approved.
These terms may sound similar, but they are very different. Pre-qualification is a simple questionnaire about your financial situation. Most of the time you can get pre-qualified in minutes. It’s like taking a BuzzFeed quiz—kind of fun, but not incredibly accurate or useful in the real world.
Myth: Pre-approval automatically equals a loan.
Getting pre-approved is a conditional commitment. It’s important not to take it for granted. Change of employment, income, or financial situation can cause lenders to revoke the pre-approval offer. That’s why it’s so important to work with a mortgage broker who can read the fine print and translate the legalese.
Myth: I am obligated to go with the lender who pre-approved my mortgage.
Not only is this untrue, but smart homebuyers will shop around for pre-approvals. You’re probably not going to buy the first house you stepped into without looking at others, so why would you stop at one pre-approval?
When it comes to something as big as purchasing a home, don’t rely on rumours to guide your way. A mortgage broker can help you navigate past all of the misinformation and guide you to making well-informed decisions for your future. Ready to get pre-approved for a home in Red Deer or surrounding areas? Call us at 403-341-7800.
Source was absolutely great to work with - went above and beyond to help us get everything done when buying our new home. Highly recommended!! Chad and Jenelle Richards Jan 09 2013
Chad and Jenelle Richards
Added January 23rd 2013
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