Mortgage Pre-Approval

A pre-approval allows you to set budgetary limits. Buying a home is a major investment, and most of us are not able to pay for a home up front in cash. Before you even begin looking at homes for sale, you need to shop for a mortgage and compare options offered by different lenders. This will allow you to know the maximum amount you qualify for. The lender may even be able to lock in an interest rate for 60-130 days.

Once you know your budget limits, you can now begin working with your REALTOR®. At this point, my market knowledge will help you understand what location, size, and style of home you can expect to find within your budget.

A pre-approval makes you an attractive buyer. There are two types of markets: buyer’s markets and seller’s markets. In a buyer’s market, inventory is high and demand is low. This means that buyers have a lot more lee-way in terms of the purchasing process. In a seller’s market, however, inventory is low and demand is high, and buyers need any advantage they can get on their side.

Most markets go back and forth between these two varieties season to season and/or year to year. And if you’re looking to buy in a seller’s market, then one of the advantages that you’re definitely going to want is a mortgage pre-approval.

Consider this: if there are 2 buyers making an asking price offer on a home, and only one has a mortgage pre-approval, who do you think the seller is going to be more likely to go with? In almost all cases it’s going to be the buyer with a pre-approval, since there’s much less risk to the seller of the deal falling through due to lack of appropriate financing.

A pre-approval gives you room to negotiate. In addition to making you a more attractive buyer, a mortgage pre-approval also lends you some flexibility in terms of bargaining and negotiations. That’s because sellers who know that a buyer is already qualified for the offer amount may be more likely to make some compromises if it means the sale is a sure thing.

If you want some repairs or improvements thrown in, or if you want the seller to cover your closing costs or purchase a home warranty for you, your mortgage pre-approval will help strengthen your position and may make it more likely that you get what you’re asking for.

A pre-approval allows for a faster close. On average, it takes about 50 days to close on a house. The delay is due to quite a few different things, and that includes mortgage approvals. If you’ve already got your pre-approval in hand, you’ll be able to speed up the process so you can move into your new home earlier than you might have been able to otherwise.

Securing financing is the first thing that happens when you start to close on a home. With a mortgage pre-approval, financing is already secured and you can jump right to the next steps, such as your appraisal and inspection. This is a particularly beneficial advantage if the seller is also trying to close sooner rather than later.

At the end of the day, the most important lesson when it comes to having a mortgage pre-approval is that you will be far better off having it before making an offer than not. Ready to get started? Fill out the form below and one of my preferred mortgage lenders will reach out to get the process started right away!