3 Reasons Why getting Pre-Approved pays off.
Written by: Andrea Jardine | September 24, 2019
Searching for a new home can be exciting, but if you’re really serious about purchasing a home you might want to start the process in the lender’s office.. not an open house. In this post, we will go over the 3 reasons why you should be getting pre-Approved before you start your home search. It’s not as scary as it might sound. I’ll also give you a short list of what lenders need to get it done.
1. Find out what you can afford to spend.
The first reason why you should get pre-approved before looking for homes is to find out how much you can spend on your home. By sitting down with a lender and providing the proper documentation, your lender can calculate how much you can afford to spend on a mortgage each month. This might be higher or lower than you once thought, so knowing this number before making any offers can be extremely beneficial.
2. Let the seller know you’re a serious buyer.
Our current housing market in East Idaho is a fast-paced one. It is not uncommon in a seller’s market to have multiple offers on a property. When a multiple offer situation occurs, the Sellers will choose the offer that is the most advantageous to them. So if 2 offers come in at the same time for roughly the same amount.. and one offer includes a pre-approval letter while the other offer does NOT.. The sellers will likely choose the offer with lender pre-approval. From the seller’s perspective, the sale has a smaller likelihood of falling through if the buyer already has their financing figured out. If you see a home you are in LOVE with.. better to include a pre-approval to give your offer a higher likelihood of being accepted.
3. Make the closing process simpler and quicker.
30 Days might seem like a lot of time to close on a home but there are a lot of tasks that occur in this time. Even a few days added to the end of a closing can wreak havoc on moving days and funding. By obtaining your pre-approval from a qualified lender you are able to move quicker through the loan process thus making closing a bit simpler for your lender.
What is the difference between Pre-Qualified and Pre-Approved?
Pre-qualification vs. Pre-approval
A mortgage pre-qualification can be useful as an estimate of how much someone can afford to spend on a home, but a pre-approval is much more valuable. It means the lender has checked the potential buyer’s credit and verified the documentation to approve a specific loan amount (the approval usually lasts for a particular period, such as 60 to 90 days). Final loan approval occurs when the buyer has an appraisal done and the loan is applied to a property.
What is needed for a lender pre-approval?
- Proof of Income
- Proof of Assets
- Good Credit
- Employment / Income Verification
- Other Documentation