10 Reasons to Pre-Qualify For A Hawaii Home Loan

The recent sharp drop in median home prices on all of the Hawaiian Islands has presented some great buying opportunities. However, uncertain lending conditions make Pre-Qualification for a loan a good idea.

Here are the Top 10 Reasons to get Pre-Qualified for a Loan:

1. Your offer will be more appealing to the seller, and sellers may require a Pre-Qualification or Pre-
Approval letter.
2. You will be able to determine exactly what your monthly mortgage payments will be on any offer you might make if you are getting a fixed rate loan and you get Pre-Qualified for a certain amount. This includes the principal and interest as well as escrow, taxes, and private mortgage insurance (PMI) – insurance purchased by buyer to protect the lender.
3. You will save a great deal of time by avoiding looking at, or even considering, homes that you are not able to afford. You don’t want to think that you have found the perfect home and then only later realize that you cannot afford it.
4. Banks have dramatically tightened lending standards due to economic conditions, enforcing a stricter debt-to-income ratio (DTI) which reflects the percentage of your debt as compared to your gross annual income.
5. Pre-Qualification determines precisely which loans you will be able to get based upon your credit history, income, debt, down payment amount, and other factors.
6. Using a new “smart-technology” real estate site such as Hawaiilife.com you will be able to precisely pre-set your search criteria – including your price range – and then get updates only on homes you are interested in AND are able to afford.
7. Pre-Qualification will lessen your stress when choosing a loan package. You don’t have to use the same lender that Pre-Qualified you, so you can shop around and compare rates.
8. You also will be in a better position to anticipate the exact closing costs of the real estate purchase, and what each of the costs are for.
9. Once you are Pre-Qualified for a loan, you will be able to get optimal use of your real estate agent’s time for other important aspects of the home-buying process including considering different home styles and evaluating the desirability of particular locations (e.g., the quality of the local schools).
10. A mortgage broker will be able to discuss different financing options with you once you are Pre-Qualified, and he/she will also help you choose the best type of loan for your particular situation.

In summary, now more than ever it is important to Pre-Qualify for a loan if you are considering buying a house for sale in Hawaii. A Pre-Qualification Letter from a lender will state that your credit and financial information has been reviewed and is acceptable for getting a loan, though it does not provide an absolute guarantee of a loan. You may consider going the extra step and getting Pre-Approved for a home loan before you make the offer. This will give you the best chance of getting the property in a competitive market.