Getting preapproved for a home loan can make or break your home or condo buying experience. To sellers, it’s a signal that you’re a serious buyer, and getting preapproved also helps give you a one-up over other buyers who might be interested in the same property you’re considering.
If you’re smart, you’ll start your home or condo buying experience with getting pre-approved. But before you apply, here’s a quick look at several tips to keep in mind that will also go a long way in securing the new home or condo you truly want…
Work on raising your credit score
Even if you already have a strong credit score, it doesn’t hurt to maximize it any way you can. The better your score, the better your rate.
Improve your DTI
By default, improving your credit score usually means paying down your debt, which also means you’ll be improving your debt-to-income ratio. This is also a big deal to lenders and something you’ll want to work on before applying for a mortgage.
Ask your lender to adjust a preapproval letter for what you plan on spending
This is a sneaky good tip and something you’ll definitely want to do. If for example a lender approves you for a $300,000 mortgage but the property you like is only $250,000, consider asking for a letter than guarantees only that amount, or even slightly lower. Otherwise the seller might be tougher during negotiations if you present a letter that clearly shows you’re approved for more.
Plan your home search accordingly
Most preapproval letters are valid for 90 days, which means buyers should only request the letter when they’re officially ready to begin a search. The last thing you’ll want to do is start the whole process over if you’re late to getting a search started and your preapproval letter expires.