Mortgage Savvy: Pre-Approvals

January 29, 2010

When sourcing a mortgage lender, most home buyers are understandably focused on the interest rates being offered. But here are two other factors you should consider when you go for your pre-approval:

The reputation of your lender. With the recent and ongoing changes to home financing regulations, listing agents need to be confident that your financing is solid and will hold together through closing. Having a pre-approval letter from a well-established and reputable lender is vital to your offer’s acceptance.

You should not have to pay for a pre-approval. Many banks have started charging fees for their pre-approvals–often hundreds of dollars. While you may be able to apply the fees to your closing costs, if you don’t like the rates that lender is offering and decide to go somewhere else, that money is gone. There’s no reason that you should lock yourself into such a situation–there are still many good lenders offering free pre-approval.

Ask your Realtor for advice on selecting a lender, and talk to your friends and family members who’ve recently obtained mortgages about their experience.

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