If you are about to begin the process of buying your home, start by meeting with a lender to get a mortgage pre-approval before finding a real estate agent.
A mortgage pre-approval is one document that will ensure you stand out from other homebuyers and help you shop smarter for your home.
So, what exactly is a mortgage pre-approval?
A mortgage pre-approval means a lender has taken a hard look at your financial situation — your income, assets, debt, and credit score — and approved you for a specific loan amount.
You will be given a letter that proves the lender has checked your credit and determined how much you can borrow, what you will pay per month, and what your interest rate will be. This letter usually remains valid for 60 to 90 days.
Showing sellers this letter will make them more eager to work with you since they know they are dealing with someone who isn’t wasting their time and who can afford to pay for the house.
Getting a mortgage pre-approval will benefit you in other ways, and we have outlined those benefits below:
It Simplifies Your Housing Search
A mortgage pre-approval will help you understand your financial requirements upfront since the lender will specify the maximum amount of money you can get for a mortgage.
That way, the next time you receive a new listing alert, you can save time by avoiding expensive houses that are outside your budget and focus on properties that you can afford.
It Strengthens Your Position During Negotiations
A mortgage pre-approval will give you more flexibility during negotiations with sellers. Your pre-approval convinces sellers you are a serious buyer, and so they may be more willing to make some compromises.
You can use your strong position to ask the seller to reduce the price, cover repair costs, or purchase a home warranty on your behalf.
It Speeds Up The Process
It typically takes about 50 days to close on a house. A significant part of this delay is the time it takes to get mortgage approval. With your pre-approval, you will be on the fast track to closing.
Your information is already in the lender’s system that you can borrow the stated amount, and this will speed up the loan process when you make your application.
Getting your mortgage pre-approval before going house hunting will save you a lot of headaches later. There is no downside to getting your pre-approval, and the sooner you get it, the faster you can get the property you want.