The home buying experience can be very exciting, but intimidating at the same time. Part of the process involves working with your mortgage lender to secure the financing for your home. For those that have not done it before, it is a process filled with many surprises that you may not be prepared for. Avoid any potential shocks along the way by knowing about these two things.
Your Mortgage Pre-Qualification Does Not Mean You're Pre-Approved
The first time you meet with a loan officer, you will be pre-qualified for a loan up to a specific amount of money. This amount is determined by the discussion you have with the loan officer. You will tell them about your current income, expenses, debts, and any other relevant financial matters that could impact the purchase of a home. The pre-qualification will be based on this information, but no verification is done.
The actual mortgage pre-approval is done later once you find a home, and it involves doing a credit check and even employment verification. It's possible that the amount you were pre-qualified for will be different than what you are pre-approved for. Keep this in mind when selecting a home, and avoid picking one at the very top of your pre-approved loan amount.
Interest Rates Change Daily
r interest rate on your mortgage is not final until the day that you lock it in. You can prolong putting it off in hopes that interest rates will drop, but you run the risk of the interest rate going up as well. Once the rate is locked in, you will have a specific amount of days to close on your home. If you do not close by that time, you lose your interest rate lock and must lock in the rate again. Generally, the more days you are given to close on your home, the higher the interest rate will be. Since you are not sure what interest rates could be 30,60, or 90 days from when you lock in your rate, it is sometimes worth selecting a higher rate and longer lock period in exchange for peace of mind.
The mistake that many first time homebuyers make is not understanding when their rate is locked. The rate advertised on the day you get pre-qualified is not the rate you'll receive for your loan.
In order to be prepared for potential surprised regarding your loan, speak with a local mortgage lender like Doolin Security Savings Bank before you start looking for a home.Share