With your mortgage loan pre-approval in hand, you're ready to buy your first (or second) house. Unfortunately, a pre-approval doesn’t always guarantee that you’ll close on a house. A lot can happen between the time you’re pre-approved and the time you’re ready to close. But don't feel discouraged. Here are seven must-dos after a mortgage loan pre-approval.
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1. Keep a Copy of Your Pre-Approval Letter
Your mortgage lender will send a copy of your mortgage loan pre-approval letter. Keep this letter in a safe place. If you decide to work with a realtor, this professional will request a copy of your letter. This way, he knows that you're a serious buyer and he’ll give you the attention you deserve.
2. Include Pre-Approval Letter with Any Bids
Once you find a house, include a copy of your pre-approval letter with your contract or bid. If you do not include this letter, the seller may assume that you haven't been pre-approved for a mortgage loan. As a result, he may choose another bidder.
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3. Compare Other Mortgage Offers
Being pre-approved by one lender doesn't mean that you can't shop around. Comparison shopping is one of the best ways to make sure you receive the lowest mortgage rate on a mortgage loan. These are no-obligation quotes. Therefore, you can request loan quotes from different lenders with no obligation to work with the bank. Complete all your home loan applications within a 30-day period. Therefore, all applications will count as one inquiry.
4. Maintain a Good Credit Score
Even if you qualify for a mortgage loan today, any changes to your credit history before closing can impact your approval. Your lender will pull your credit again right before closing so keep your credit in good shape. Continue to pay bills on time and don't accumulate additional.
5. Keep Your Job
Quitting your job is one of the worst things you can do after getting pre-approved for a mortgage loan. Lenders require stability. And often times, the bank will only approve your application if you’ve been with the same employer or same field for two consecutive years. Your mortgage loan isn't a done deal until you sign the paperwork. If you're thinking about changing occupations, decreasing your hours at work or becoming self-employed, wait until after you close on your mortgage loan.
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6. Find a House within 60 to 90 Days
A mortgage loan pre-approval will expire after a certain number of months, depending on the bank. Typically, you have to buy a home within the next 60 to 90 days. If it takes longer to find a home, the lender may ask that you start the process over and complete another application.
7. Save Your Money
You might already have a down payment and closing costs. However, continue to save money as you look for a home. Buying a house is costly and additional expenses can pop up. On average, you’ll need at least 5% for a down payment (on a conventional mortgage), and between 2% and 5% for closing.
Buying a home is an exciting time, especially if you’ve been planning for years. Although a mortgage loan pre-approval says you’re able to purchase, nothing is written in stone until you sign the documents at closing.
How did you prepare for your mortgage loan pre-approval?
