Why Should You Get Pre-Approved?

A pre-approval is a written commitment from your lending institution that it will release a given amount of funds when you get a home. The process involves checking your bank statements, credit report, ability to pay the loan and tax return among other things. It takes some time to be pre-approved, but it is worth the effort. Here are reasons why you should get pre-approved before looking for a home.


It helps streamline your house hunting

There are hundreds of homes for sale around the country. The homes come in a broad range of prices depending on the size, neighborhood and style. Unfortunately, if you are not pre-approved, you cannot call which house you can afford.

 You may be looking for houses that are way above what you can afford or way below what you can afford therefore not getting the right home for you. With a pre-approval, you can sort homes by price and focus on what you can afford. This makes it easier to identify your dream home.


You have a higher chance of being accepted by sellers

The property market is a seller market. There is more demand than the supply. Therefore, the seller will get many offers on a piece of property. The sellers are less willing to work with buyers who are not pre-approved as there is no way of telling their financial capability.

 With a pre-approval in place, it shows that you are serious about getting the property and have a financial backing to go for it. Therefore, the sellers may be more willing to look at your offer and negotiate.


You understand the costs

Most financial institutions and mortgage lenders quote very attractive rates when advertising for the loans. However, many of them have hidden costs and terms that you need to fulfill to qualify for the loans. Many other lenders are ready to customize offers to match your need and qualification.

 When you prequalify for a loan, you understand the exact costs that you will incur regarding the fees, interest and other charges. This helps you to be prepared and pick the loan amount that you can pay with ease.


You shop for a house like a cash buyer

Being pre-approved offers you the confidence to shop for the property like a cash buyer. You can approach the seller with ease and make an offer knowing that the money will be available when and if he accepts the offer. Confidence is an important quality when negotiating for a house for it can fetch you a good price.

 If you do not pre-qualify for the mortgage amount equivalent to the kind of home that you seek to buy, you can delay the house hunting; work on your credit rating as well as the income levels. After that, you can get a second pre-approval and see if you have been approved for the amount you need. A house is probably your biggest investment yet. Get pre-approved for a mortgage to get the best house you can get as per your financial strength.

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