Gives you your maximize spending limit. Just like credit cards or monthly budgets, before you go shopping you always have to know how much you can spend otherwise spending too much will lead you to the path towards financial trouble. Getting pre-qualified is similar to this type of financial management. It gives you your limit so that you know how much you can afford before you have to start stretching your wallet.
You will find out the loan programs available to you. After gathering your qualification documentation and information your lender will be able to ascertain which loan programs are available to you so that you may feel more comfortable with your options.
You will be able to get a rough estimate of your monthly payment. The first step of becoming a homeowner or property investor is hard enough but we have to remember that there is also the recurring step of making monthly payments towards your mortgage. By getting pre-qualified first you will find out how much your mortgage payments are expected to be and you will be able to properly budget for it.
You can find out what your down payment and closing costs will amount to. One of the biggest purchases of your life will require a big sum of money to complete. Taking this initial pre-qualification step, you are ultimately going to find out how much down payment will be required from you and how much an estimation of closing costs will be so that you can be prepared for the moment when it arrives.
Save yourself time and energy while making your offer stronger. It is important for sellers and the listing agent to know that you, as a buyer, are serious and capable of buying the house. The sellers have most likely seen buyer after buyer whom have given high offers but end up not being able to qualify for a loan. Listing agents, above all, have definitely seen these scenarios go through time and time again. So by being pre-qualified first you will make your offer stronger since you have already taken the first step of speaking with a mortgage consultant to determine your financial strength.
Streamline the process. By taking that first step to get qualified first and to divulge all your information to your mortgage consultant to begin with, you will streamline and simplify the process in the long term. There will be less confusion and less miscommunication as time goes on and it will allow your mortgage consultant to find you the best fit while making sure that the process is as smooth as possible.
Gives you time to correct any problems if there are any. Getting pre-qualified first gives the lender and you the opportunity to pinpoint any possible problems that may arise when you find the home or property of your dreams. If there is an erroneous glitch on your credit or if you find insufficient funds in your accounts, there will still be enough time to fix it before going into contract for a house.
It gives you the chance to get to know your lender and establish that relationship. One of the most important things when buying a home are the relationships you have with your real estate agent and mortgage consultant. You have to feel comfortable with them and you have to know you'll be able to trust them--after all they are guiding you through one of the most important steps in your life. By getting pre-qualified first you are giving yourself the extra time to get to know your lender and determine whether you feel comfortable with him or her to continue the mortgage process.
