Going out and finding a home is a very exciting thing to do. When you’re ready to find that dream home, you won’t want something as mundane as a not being qualified to purchase the home to get in the way, right? When we refer to pre-approval, we’re talking about getting the bank/credit union to agree to lend you money (up to a specified amount) before purchasing a car or a house says Financial Buzz.
A pre-approval, according to Regions, means a loan application must be completed which is required in order to be pre-qualified. The mortgage lender will review the following information: income, debt, assets, confirmed monies available for down payment and closing costs. A credit report will be run and the borrower may request a pre-approval letter which is subject to additional documentation and property approval. The best part is that this is for free.A bank doesn’t make money on money that isn’t loaned out. So it is in the banks best interest to maker sure you are a worthy investment.
The bottom line is that a lender will let the buyer know what they can ultimately afford which will save both the Realtor and the buyer their most important commodity, time. So what are the big reasons to get pre-approved before house hunting?
Get the best deal
– If you meet up with the realtor and you already have a pre-approved loan, their line of questioning usually shifts to “what did the bank offer you?” If they can, the realtor will try to match or even beat the interest rate you’ve already been approved for so they can keep the financing in-house or go with one of their institutions and get a slice of the action.
– If you don’t know what you can afford, you may be looking out of your price range and wasting your time. You may also be looking below what you would have qualified for and not getting the right home for you cautions Realtor.com. By getting pre-approves, you can streamline your search by price-sorting and find your dream home faster.
– Having been pre-approved makes you more attractive to home sellers because this lets them know you have the capacity to purchase what they are offering. In fact, many realtors and sellers will refuse to sell to buyers who make an offer on a home without pre-approval warns Cornerstone Mortgage.
Stress-free House Hunting
– Most likely, if you’re not pre-approved, you’ll spend a longer time looking for houses and talking to realtors and homeowners. Getting your dream house may take more time and effort and your bid may even be turned down! Once you’re pre-approved to be a qualified buyer then you’ll be able to make offers on houses more confidently and without worrying about rejection.
Some important things to remember: If a buyer is not ready to buy due to credit worthiness, a lender will definitely work with a buyer on improving their credit score without having to deal with credit improvement agencies. They can give quick pointers on how to raise one’s credit score by more than 40+ points within a very small amount of time. You just have to take the time to go out and meet with them. There! Since it’s very easy to file for pre-approval to purchase that house you’ve been eyeing for the past few months, why don’t you start today?