Why is it so important to have a mortgage pre-approval in place before looking for a home? Here are 4 reason why it is beneficial to a buyer.
1. It lets you know how much you can or want to spend.
Buying a home is a major investment, and most of us aren’t paying cash for the whole thing up front. When you get a mortgage pre-approval, you’re able to set your budgetary limits and make sure that any home you’re looking at is a home that you will be able to finance. Your mortgage broker can show you ahead of time what your mortgage payments will be for the different price ranges you’re interested in looking at.
2. It makes you a more attractive buyer to the seller
Currently we are in a seller’s market, which means, inventory is low and demand is high, and buyers need any advantage they can get on their side if they want to beat out the competition. If two buyers end up offering the same amount on the same home, the seller almost always will pick the offer from the buyer who is pre-approved for financing because there is less risk that the deal will fall through due to financing.
3. You can remove your financing condition faster.
This also makes your offer stronger to the seller because you will have shorter condition dates than someone who does not have a pre-approval in place. When you go through the pre-approval process with your mortgage broker, they will make sure that all your personal/financial documents are on file. So the lender isn’t waiting to see these documents.
4. You can lock in a lower interest rate with a rate hold.
Through your preapproval process your mortgage broker can get a rate hold for you. This is where a specific rate is help for you for a certain amount of days. Generally 3-4 months. So when your are looking for a home you’ll know what interest rate your mortgage will have. Even if the rates go up during that time, you will still be able to get the lower rate.
If you are thinking to purchase a home in the next few months, it is very important to have a current preapproval in place, especially in this market!!