You’re excited. You’ve been thinking of buying a home for a long time. You’ve decided now is the time. Congratulations! Now you should understand the importance of getting pre-approved for a mortgage. It might sound like more trouble than you want to bother with, or it might dampen your enthusiasm to think of dealing with paperwork and banks.
But, it’s so worth the initial time.
Without a pre-approval, you might be wasting your valuable time looking at homes well beyond what you can afford. Wouldn’t it be disappointing to find the perfect place, only to learn that you don’t qualify for that home? Likewise, you might be selling yourself short and don’t realize you can afford to dream bigger.
Finding your dream home will be much easier and much, much less stressful with a pre-approval.
With a pre-approval, a REALTOR® will know exactly what properties to focus on and will be able to suggest different neighborhoods, sizes and conditions of homes to match your needs–making it easier to get you exactly what you want.
Sellers are also less willing to accept offers from a buyer without a pre-approval. However, if you are pre-approved, you have more room to haggle. Sellers may be more willing to lower the asking price, include appliances, cover closing costs or make other allowances to work with a pre-approved buyer.
Home searching without a pre-approval will wreak havoc on your stress level too. You’ll spend longer looking for homes! Your REALTOR® won’t be able to develop leads for you as effectively without having a true understanding of what price range you can afford. Naturally, this will only add to your aggravation and stress. You may get turned down once you’re ready to make an offer. How disappointing would that be? All of this adds more time and stress to what should be a very exciting time in your life.
On the other hand, if you’re pre-approved, you have less to worry about: you know you’re a qualified buyer, you know there are lenders willing to work with you, and you can feel pretty confident when you make an offer.
The statistics bear out that there is a higher acceptance rate for pre-approved buyers.
So, what is the difference between pre-qualification and pre-approval? Pre-qualification is an estimate that lets you know the amount you’ll be able to afford to borrow based on the information you provided. Basically, it’s an agreement between you and your lender whereby your lender says they will lend you the money you need to buy a house, assuming the information on your application is accurate, honest and complete.
Pre-approval is the next step after pre-qualification. You will need to provide more supporting documentation, each lender requiring similar paperwork although perhaps slightly different according to their policies. Once your documents have been processed and verified, you will receive a pre-approval letter which can be used to assure real estate brokers and sellers that you are now a qualified borrower.
You can now go about your home search confident that you are looking within your price range and know you will have the financing you need. A pre-approval letter shows sellers that you are a legitimate buyer. It shows you are serious about buying.
It tells sellers, “I’m ready to buy a home. I’ve worked with my lender who has approved my application and is willing to put it in writing that I qualify for a mortgage of ‘x’ dollars anytime in the next 60 days.”
In a nutshell, pre-approvals provide assurance to the seller. As your REALTOR®, I have a network of professionals that will be happy to help you. I can walk you through the process and answer your questions, so we can make sure you are able to find–and afford–the home you deserve.
Contact me today so we can get started finding you the dream home you want–and qualify for!
Here’s an additional link that goes into more detail about your credit, debt ratio, etc. so before seeking a pre-approval.