May 21 2009
Pre-Qualification & Curbing Spending Habits
If you are considering a move the Newport Beach area, you are probably also considering your mortgage options. Choosing the right mortgage can be a complicated process at times. However, with the help of a professional Newport Beach Realtor and mortgage broker you’ll be able to determine the home loan most suitable to your needs.
Before you even begin your search for Newport Beach homes it is important to obtain a pre-qualification letter from your local bank or mortgage broker. Being able to provide this letter of approval when you are ready to make an offer will provide your offer with a solid foundation. When sellers know that you have been pre-qualified for a home loan matching their home value they are much more likely to accept your offer over someone who does not have pre-qualification. However, it is important to remember that a pre-qualification letter does NOT guarantee approval of a home loan once you have found the home of your dreams.
For example, Suzy Q goes to the bank to obtain a pre-qualification letter. At this time Suzy Q has little credit card debt and her car loan is almost paid off. She obtains a pre-qualification letter for a specific amount and begins her search for Newport Beach homes. Over the next four months Suzy Q gets excited about the possibilities of owning her own Newport Beach home and begins a buying spree of new furniture to outfit her new home. Additionally, she feels that having a new car to match her new home is important. When Suzy goes to get approved on a home loan for the same amount she was previously approved for she is denied: her new found debt will not allow her to make the payments necessary on her new home with her existing salary.
After you obtain pre-approval from your bank be sure to curb your spending habits. Now is not the time to make large credit card purchases or to buy a new car. Depending on the amount spent you could either decrease the amount of the loan approval or lose it altogether. Keeping your spending habits to a minimum during your search for Newport Beach homes will enable you to buy a home in a higher price range.