This is a very common question when people are looking to purchase a new home. It doesn’t matter whether it’s your first home or your 10th; the question “should I talk with a bank before looking at homes?” is still relevant.
The simple answer is yes. However, it is important to note that you don’t have to talk to a bank; there are numerous other financial institutions that can help with the house buying process. There are several reasons why this is a good idea:
Establish Your Credit
The first reason is to establish how much you can borrow. This will depend on your current financial commitments, your credit rating and your earnings. If you have a house your current level of equity should also be considered although this is effectively your deposit on your new home.
Don’t forget that you can approach several different lending firms without damaging your credit worthiness. You’re simply asking for a basic indication of what they would lend; the proper agreement can come later.
This will allow you to check with real estate agents for properties in your budget range. Don’t forget that an auctioneer in Sydney can also have some great houses for sale.
Know Your Options
By talking with different lenders you’ll be aware of the different options that are available to you depending on the value of the property you want. This can help you to stretch your budget or get the best possible deal on your next mortgage.
Be Taken Seriously
If you’ve taken the time to become pre-approved then any seller will be more interested in your offer. The seller will see you as serious, prepared and likely to give them a hassle free sell. This will help in any market but will be especially useful if you’re tackling a ‘hot’ market.
When you’ve found a property you’ll need to pay the deposit. There will also be lender fees, insurance and a few other costs that need to be covered. If you know how much you can borrow then you know how much you can spend; and what it will cost you upfront.
This will help you to make sure you have the necessary funds when needed.
Get the Paperwork Done
There is a surprising amount of paperwork needed to complete a house purchase. By applying early you’ll have got the ball rolling making the process much simpler when you find the right house and need to complete the sale.
This will reduce the stress of buying and moving and allow you to focus on finding the right property.
Your Selling Price
Ideally you should be selling your home for the best possible price you can get. However, unrealistically high process and expectations can damage your own house shopping efforts. By visiting the bank and knowing how much you can borrow you’ll be able to decide what you need for your current home; especially if you’ve already seen your new one.
This can help you to be more flexible when it comes to negotiating the price on both the one you’re selling and the one you’re buying.