The Power Of Pre-Approval
Before you walk into your first meeting with a real estate agent, you’ll want to offer proof that you have the income, credit score, and the budget for a home purchase. In short, you need to be pre-qualified and pre-approved.
A mortgage pre-approval tells real estate agents
working on behalf of sellers that you will likely be approved for a loan. It means that your offers will be taken more seriously, and could even lift you above others eyeing the same homes as you.
Both pre-qualification and pre-approval are steps on the way to lender approval. Typically, the pre-qualification phase comes first, while the pre-approval—a more intensive process—is the next step. Before you put in your first offer, aim to be pre- approved.
During pre-approval, you’ll submit financial records to the lender to provide evidence of your total net worth—your assets, income, and current debts, as well as your credit score. So long as you don’t buy a big-ticket item or take out a new loan, you’ll most likely have no issues getting the funding you seek. Many lenders do pre-qualifications and pre-approvals over the internet.
Why is it important to get pre-approved before purchasing a home?
You can set up your budget in advance. A home is a big investment, and so knowing what your mortgage will be can help you set up your budget and financial plans early on in the process.
You will give the impression of being a responsible buyer. Sellers are looking for someone who takes the purchasing process seriously and if you show the seller you’re pre-approved already, they are much more likely to go into negotiations.
You have more negotiating power. Since a mortgage will show the seller that you, as a home buyer, are qualified to buy a home, the seller may be open to a larger range of bidding prices due to decreased risk of financial losses.
You can move in faster! Being pre-approved means you already got one of the biggest steps done and you can move on to the closing process quicker. Before you know it, the keys will be yours.