To say that things have changed in the mortgage business would be a huge understatement. Qualifying is more challenging, down payment requirements have changed, and sources of income that once were allowed now are not. The rules have changed and it seems new guidelines continue to be put in place almost every month.
Because of new mortgage loan underwriting guidelines, there is now more financial risk to the home buyer than ever before. So what should you do to make sure you don’t run into any unpleasant surprises? Spend the time now to get pre-approved. It could literally save you thousands of dollars.
Here are a few examples of the serious risks you could face by not getting pre-approved for your mortgage before putting your new home under contract.
Loss of Earnest Money
You could loose your entire earnest money deposit. This is typically 1% of the purchase price of a home. If you pass the loan approval date specified in the contract, and your loan is later denied, the seller can legally keep every penny of your earnest money deposit.
Loss of Money Paid to Home Inspectors
Home inspectors and pest inspection companies require that you pay them at the time their services are rendered. The typical home inspection, radon test, and termite inspection can easily cost $600 or more.
These inspections are always done within a few weeks of going under contract. It must be done this way to allow time for necessary repairs to be completed. The loan approval date in the contract is almost always after inspections are completed and paid for. There is no way to recover this money if your loan if denied.
Appraisals, Surveys, and Attorney Fees
You will typically pay $400 for an appraisal at the time you apply for a mortgage. The attorney will order a $400 survey as soon as they open the file. The attorney will expect to get paid for title work and other services whether your loan is approved, or not. This could add another $700-1000 to your losses if your loan is denied late in the process.
Protect Yourself From $3,600 of Exposure on a $200K Purchase
That’s right. In a worst case scenario, you could lose $3,600 on a typical $200K home purchase haitch conveyancing melbourne. And you could lose the home too. The way to avoid all of this calamity is to simply get pre-approved for your mortgage loan before going under contract. As a matter of fact, there is one additional incentive for you to get pre-approved before you even begin looking at homes.
Buy Your Home With The Power of Cash
If I present your offer with a strong pre-approval letter in hand from a reputable lender, the seller will look at that the same as a cash offer. This is powerful! The number one reason that sellers hesitate to accept an offer that is below their expectations with regards to price is that they are afraid the loan will not be approved. With a cash offer, or an offer with a pre-approved loan, they will typically be willing to accept a lower purchase price.
So lower your risk, decrease your stress, and save thousands on your next home purchase. Get pre-approved as early in the process as possible.
By not getting your mortgage pre-approved, you can lose a lot of money, maybe the entire deposit, even through the home inspectors. You could buy a home with the cash offer. There are additional appraisals, surveys and attorney fees, which are included as well.