It’s quite easy to get caught up in the excitement of looking for a home to buy. But within your home buying journey, establishing that you’re a serious buyer is a plus. Usually, this can be established through a mortgage pre-approval.
Buying a new home is a long process. It takes effort and preparation, especially when applying for a mortgage, looking for the right lenders or even when house hunting. But getting mortgage pre-approval would help lift some of that burden off.
WHAT IS A MORTGAGE PRE-APPROVAL?
Before going into details, it’s important to know that pre-qualification is different from pre-approval. Pre-qualification is basically the first step and pre-approval comes second. When you pre-qualify, the process is not entirely formal whereas, in pre-approval, there is a formal verification of your documentation and information.
Mortgage pre-approval is a step where your lender goes through your requirements, verifies them, and determines the amount your mortgage can be. It’s important to know that each lender has varied pre-approval requirements. Therefore it’s smart to ask around, compare and decide on which lender gives you the better option.
GETTING PRE-APPROVED GIVES YOU AN ADVANTAGE AMONG OTHER INTERESTED BUYERS
Sellers would want to see potential buyers who are pre-approved. It gives them an impression that you are serious about buying their home. With the competition in the market, sellers would get a lot of offers in the house they put up for sale.
But if you’ve already had your mortgage pre-approved, sellers would lean towards your offer more than those who have not. Therefore, it’s a safe move to get a pre-approval before searching for a potential home to buy.
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YOU’LL DETERMINE HOW MUCH YOU CAN AFFORD
When you get pre-approved, you would know how much mortgage you’re allowed. Knowing how much you can afford puts you at ease because you’ll know what houses are within your price range. This would make house hunting a lot easier.
You typically don’t want to end up not buying a house after all because you decided on a property that is beyond your actual loan amount.
IT HELPS YOU GET YOUR FINANCES IN ORDER
By knowing what you can afford, you’ll know where you’ll stand in other out of pocket costs. You’d want to have a stress-free journey to your new home. Therefore it’s important to know that getting a mortgage pre-approval can help you understand that terms of your loan, how much down payment you need to prepare, what costs are covered and what else is needed to be done.
Other than that, you would want to stick with the deal you can afford through and through. Not knowing where you stand can also affect the seller, too. If they decide to take you up on your offer but end up not having enough money because your loan amount does not match the price of your property, this could lead to other consequences like having the seller take up legal actions. That’s something you definitely don’t want to happen.
But all in all, getting a mortgage pre-approved is undoubtedly beneficial. Besides, there’s not a lot of buyers who are considering step. If you do, this will give you a much more advantage among the competition.