3 benefits of mortgage pre-approval
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If you’re thinking about buying a home, one of the first things you should do is get pre-approved for a mortgage. In fact, it’s a good idea to do this before you even find a real estate agent or search for properties.
Getting pre-approved means giving your financial information to mortgage lenders and getting a loan offer showing your likely interest rate and how much you can borrow. Pre-approval is not an absolute guarantee that you will get a loan. But that does mean you’ll likely get one on the agreed terms as long as your financial situation doesn’t change and the house you’re buying is worth enough to serve as collateral.
While pre-approval can be time consuming and seem complicated, you will reap these three crucial benefits if you go through the process.
1. You won’t waste time looking for homes in the wrong price range.
Mortgage pre-approval sets an upper limit on the amount you are allowed to borrow. While you may not want to borrow the maximum amount the bank allows, you certainly cannot borrow more than the bank approves for you.
If you don’t know your upper limit, you could end up wasting a lot of time looking at overpriced homes. Not only does this mean that you could spend hours on an unsuccessful quest, but it can also make it more difficult to find a property you like in your price range because you can focus on features that don’t match. your budget.
2. You are more likely to get an offer accepted
When you find a home you want to buy and submit an offer, home sellers will usually want you to provide proof of pre-approval. This is because it is in their best interest to make sure that you can get the loan approval required for the purchase.
Since it takes time to get pre-approved and the market is very competitive, you don’t want to find a home you like and then have to start looking for a bank to get you a loan. It could mean missing the opportunity to bid because you couldn’t get your pre-approval letter on time.
Submitting an offer without a prior approval letter could also cause the seller to decline because they don’t believe you will be able to get the loan you would need to buy.
3. It will be faster to close a house
Once you’ve found the perfect property, chances are you’ll want to move in quickly. And since it can take a long time to get a mortgage approved and go through the closing process, you might find that your timeline slows down if you don’t have pre-approval.
If you’ve already found a lender and submitted your financial information, you’ll just need to go through the final approval process rather than starting from scratch. It can make your purchase faster and easier. Sellers will appreciate this as well, and a shorter closing time could also help you get approved for a loan.
Pre-approval streamlines the home buying process, making it faster and increasing the likelihood that your offer to purchase will be accepted. So there is no reason not to talk to a lender and get pre-approved before you begin your property search.
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