Why Do I Need To Get Preapproved For A Loan?

Q: Is there any reason to get pre-approved for a loan?

A: For a large purchase, such as a home or car, having that pre-approval in hand before you start shopping is crucial. A pre-approval is a written letter from a lender specifying how large of a loan you will be eligible for. The letter will also detail your estimated interest rate on the loan.

Here are some other key advantages of getting a pre-approval:

1.) You’ll know what you can afford

Having this information in hand will simplify your search. It will also help you avoid disappointment later. Be sure to calculate other monthly costs, such as property taxes, home insurance and increased auto insurance rates when determining the amount of money you’ll need to shell out each month.

2.) Don’t get taken for a ride

When you’re unsure about how much you can spend on a car, the dealer will capitalize on your uncertainty by trying to sell you a car that barely skims the maximum amount you’ve told them you can afford. They may also focus only on a monthly amount you can afford. They’ll then try to inflate the payment with unnecessary charges and fees only because they fit within your named payment amount. In contrast, when you show the dealer your pre-approval letter, they will have to show you cars with price tags that fit within your loan amount.

3.) Be taken seriously

A car dealer will take you more seriously when you walk in with a pre-approval. Having that information in hand shows you’re ready to buy. When purchasing a home, a realtor will be able to assist you more efficiently when you know exactly how much house you can afford. They’ll also give you better service since you’re showing that you’re serious about buying a home. In fact, many realtors will only work with buyers who’ve obtained a pre-approval.

4.) Know you have financing you can trust

When you show up at the car dealership with a pre-approval from your credit union, you know the deal is in your best interest. Many dealers have access to several financing options and they’re almost always going to offer you options that are in their own wallet’s best interests.

5.) Purchase your dream home

A pre-approval helps you stand out from the pack. If you’re house-hunting in a competitive market, having your pre-approval will give you a leg up on bidding wars. A seller will be more eager to work with someone who’s already started the mortgage process.

In the market for a new home or car? Don’t forget to call, click, or stop by Insight Credit Union to hear about how we can help with your mortgage and auto loans!

Based on your own experience, why do you think it’s important to get pre-approved for a loan? Share your thoughts with us in the comments!

7 Easy Ways to Pay off Debt

DebtFree.jpgThere are several different approaches to pay off debt, and to say one is the best isn’t really fair or accurate. You need to choose a method that works best for you. The difficult part is designing your plan and sticking to it. That’s why we want to showcase an easy method that seems to work well for most people. Have you heard of the Snowball Method to pay down debt? Click here to read all about it. This method is a great way to pay down your debt because: 1. The process is laid out – you just need to fill in the blanks. 2. It is designed to help you see progress quickly, which keeps you motivated to keep going!

Here are some other great ways to pay down debt:

  1. STOP spending money on your credit card. Some people will go as far as to freeze their cards in a container of water. This forces them to wait out their impulsive decision, which often changes by the time the water thaws.
  2. If you have credit card debt with interest, start looking for lower or 0% APR balance transfer deals.
  3. Put all money from work raises or bonuses towards paying down your debt.
  4. Sell unwanted or unused items in your home. From clothing to furniture, there is likely something you have that someone else wants. Alternatively, sell items you receive for birthdays or holidays that you know you won’t use.
  5. “Fast” one of your more expensive luxury items for a period of time (a week or a month) and use the money you would have spent to pay down debt. For example: $5 McDonald’s breakfast x 5 days per week = $25 a week or $100 for the month.
  6. Change your expensive habits and reroute the money to pay down debt. For example: Smoking a pack of cigarettes at $6 per day is $2,190 per year.

Paying off debt isn’t easy. If it was, most of America wouldn’t be in debt. However, it isn’t the act of paying off debt that is hard, it’s changing our habits and committing to those changes. Are you willing to commit? Tell us about your journey to become debt-free below in the comment section. What is working for you? What are your challenges?