If you’ve ever been denied by an agent to see a house, then you’re probably aware of the importance of a mortgage pre-approval.
A mortgage pre-approval is a written declaration from a lender that states how much you can borrow to buy a home. In simple terms, it’s proof that you have the financial status to afford what the seller has to offer.
With credit scores lurking around the minimum of 580, which is the basic requirement by the Federal Housing Administration, chances to qualify for a home loan are slim. Agents can’t know for sure if they’re wasting their time or not.
Considering how many years you will spend on paying off your loan, going through the pre-approval process only takes a minuscule effort in comparison, yet it can save you thousands of dollars and years of debt.
Here are 5 reasons why you should consider a mortgage pre-approval:
1. You know what to look for
Imagine having to deal with the disappointment of finding your perfect home, and discovering that you can’t afford it.
Getting a mortgage pre-approval allows you to carry out your search for a home more efficiently. Since the letter states how much house you’re able to afford, you’ll have an accurate idea of what houses to look for and the process will be smoother.
2. Your offer is more valuable to sellers
Another clear benefit of pre-approval is the increased value of your offer.
Sometimes, sellers get multiple offers from different buyers, and they’re more likely to choose buyers, who assure them that they meet the financial requisites.
A mortgage pre-approval makes you a more serious buyer in their eyes, so you’re more likely to be chosen in a competitive situation.
3. Negotiation power-up
As we said earlier, a mortgage pre-approval makes your offer more valuable to sellers. When it comes down to negotiations, this is a solid ace to have up your sleeve.
It’s much harder to negotiate a lower price when the homeowner isn’t even sure that you can afford the house. But with a pre-approval letter, you might be able to get rid of a chunk of the cost.
4. Agents will work with you
One of the worst things of not having a mortgage pre-approval is that some agents will refuse to work with you.
Agents have to spend a lot of their time with each client, so it’s important for them to have the confidence that their clients are financially capable of buying a house.
5. Speeds up the process
Last but not least, having a mortgage pre-approval under your belt significantly speeds up the approval process, when you’re ready to apply for your mortgage loan. You’ll already have your financial evaluation in hand, so it will take less time for your lender to approve.
Ready to buy your first home?
Buying your first home can feel like a big and intimidating undertaking. Knowing where you stand, can lift the financial weight off your shoulders when it comes to making the right decision. Want professional help to get started? Let’s chat!