Did you know they are a couple of reasons to get pre-approved and why it is important?
Most people get a pre-approved to see how much house then might be able to afford. Most Realtors will want to know this as well. This will give the agent a reference point to work from. Buyers do not need to spend up their approval limit. Buyers should look at what they can afford to spend on housing and all the other expenses that come along with owning a home. Having a good understanding of where your comfort zone is will go along way.
But if you are ready or think you are ready or looking to buy a home quickly then getting pre-approved is a must. Most buyers do not realize in order to submit an offer, you must disclosure the type of loan you will be using to purchase the home. Once this is written into the contract the buyer must notify the seller of any changes to the type of loan and the seller must agree to this changes.
Example of part 2 of the sales contract
PRICE AND SPECIFIED FINANCING Any % are percentages of Sales Price
A. Down Payment $___________ or________ %
1. First Trust (if applicable) $______ or____" %
2. Second Trust (if applicable) $_____ or_____ %
3. Seller Held Trust $_______ or _________%
Addendum attached (if applicable)
TOTAL FINANCING $_____ or______ %
SALES PRICE $
C. First Deed of Trust Buyer will Obtain OR Assume a Fixed OR an
Adjustable rate First Deed of Trust loan amortized over _____ years. The interest rate
for this loan is at an (initial) interest rate not to exceed _____% per year of the following
Conventional See Addendum Attached VA See Addendum Attached
FHA See Addendum Attached USDA See Addendum Attached
Other: __________________ This contract is not contingent on Financing.
D. Second Deed of Trust Buyer will Obtain OR Assume a Fixed OR an
Adjustable rate Second Deed of Trust loan amortized over _____ years. The interest
rate for this loan is at an (initial) interest rate not to exceed _____% per year.