Sure we all dream of owning a bigger home, a more luxurious car, living in a gated community. But when it comes to making these large purchase decisions, there are steps we should take to ensure we are not wasting anyones time, or eventually money.
Getting pre-approval on a mortgage is one of the more crucial steps to take when begging to seriously shop for a new home. A pre-approval on a mortgage means that a lender or broker has provided you with written documentation that you may borrow up to a certain amount of money to buy a home. This is normally based on your employment status, income level, credit scores and additional information to show your financial status. A pre-approval is not a guaranteed loan, but it helps speed up the underwriting and approval process.
A pre-approval is more valuable than a pre-qualification on a mortgage because it is not just an estimate of home much you can spend on a new home, but it means that a lender has verified your credit and checked documentation already in order to approval a specific loan amount.
Here are three reasons why you should take this essential step in home buying:
Better Realtors Will Work To Get Better Results
We all do a better job at work with specific goals and objectives. If a realtor doesn’t understand exactly what you can afford they can end up wasting a lot of time trying to find you and ideal home - which can create a frustrating and stressful process.
Realtors are better at their job when they understand what you want and what you are able to afford. It streamlines the process and produces better results more efficiently. They will also be more motivated to find your ideal home because they know it will move forward.
This also helps with the closing process. You and your realtor know that the deal will likely go through, and there won’t be any surprises in the final stages off home buying.
Your offer will more likely be accepted
One of the most frustrating things we see in home buying is when a buyer finds their dream home, puts an offer in and gets declined because they don’t have pre-approval beforehand. Sellers most likely want to move quickly, so they may try to avoid working with someone who hasn’t been pre-approved. They definitely would feel more confident in accepting an offer that has already received written confirmation that they can afford the home. It is less of a risk for them, and without pre-approval you are putting yourself at more risk to lose that home you fell in love with.
More Leverage When Negotiating
Not only will a seller more likely go with your offer over someone who does not have a pre-approval on a mortgage, but they also may go with your offer even if it lower. A pre-approval provides security for all parties. As we mentioned before, sellers are often interested in the speed of the process, so they may be willing to overlook a gap in the offer price if it means they will sell their home more quickly. Especially when dealing with someone who is financially secured in buying their home.