Answer: Get preapproved first.
Preapproval it is a written statement from a lender stating the loan amount you would qualify for under that lender’s guidelines, based on your income and credit info. Preapproval letters are usually good for 60 to 90 days.
Why you need to be preapproved first
New York City is a very competitive and fast-moving real estate market and if you want to be taken seriously, you need to be prepared. That means being preapproved before you even start searching for a home. This does three things:
- You know how much you can afford
- Your agent knows you’re serious
- The seller and seller’s agent know you’re serious
Ask any New York City broker or agent about clients who were not preapproved and you will hear about the client who fell in love with an apartment, but could not meet the asking price or could not get approved for a mortgage. Not only is this situation a real bummer for the prospective buyer, but it’s also a disappointment for the broker who has devoted time and energy showing homes to that client.
This is why brokers will ask prospective buyers for a preapproval letter very early in the home search process, because if you’re not preapproved, it’s like going to a restaurant without money or a credit card. You’ll walk away frustrated and hungry.
How do you get preapproved?
Before you approach your bank or other financial institution for preapproval, do some research. Use a mortgage calculator to estimate total monthly payments, as well as other costs such as property taxes and maintenance costs. It’s also wise to check current mortgage rates.
Once you have this basic information, you can either go to your preferred lender that you do banking with or get pre-approved online in minutes.
One important note: You are not obligated to get a mortgage loan through the lender or financial institution that preapproved you.
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