Its not easy to buy a house in this hot market. Buyers face fast paced bidding wars when they find a property that they are interested in. If you’re slow or don’t offer enough, you lose the home. While getting pre-approved has always been good practice, in the past it wasn’t always necessary. In the current market boom, pre-approval can make the difference between whether you are able to buy a home or not.
| Today’s Rate | 2.908% |
| Change From Yesterday | -0.058% |
| Change From One Week Ago | -0.011% |
| Change From One Year Ago | -0.216% |
| Today’s Rate | 2.191% |
| Change From Yesterday | -0.051% |
| Change From One Week Ago | -0.006% |
| Change From One Year Ago | -0.537% |
Mortgage pre-approval has always been a recommended practice, but in today’s market it is becoming essential. Surging house prices, fast closings, and bidding wars are making the process of purchasing a home increasingly difficult. It is essential that you know how much you can spend, and that you can show proof of your purchasing power to sellers. You might put in a higher bid than another buyer, but still be turned down if the other buyer is pre-approved and you are not.
If you have a significant amount of equity in your home, you could use a home equity line of credit to pay off your first mortgage. This only makes sense if the interest rates on the HELOC are lower than your original mortgage. This strategy is currently viable for many homeowners due to the historically low interest rates that are now being offered. As home prices rise across the nation, your equity also increases. It is possible for some owners to pay off their first mortgage and cash out a profit based on their property’s equity jump alone.
Even though you got pre-approved for a mortgage, you could still be turned down or offered significantly different terms when its time to buy. This happens in situations where a person’s financial information changes between pre-approval and purchase. To reduce the chances of this happening, make sure that you do not miss any payments or otherwise jeopardize your financial profile after pre-approval.
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