You have decided that you are finally in a position to buy a home and you can stop throwing your money away on a rental when there is not any benefit to you. What happens when we make a huge decision? We want to jump in and begin because we are so excited! Before you begin previewing homes, here are 5 benefits to getting a pre-approval before calling an agent.
Pre-qualified vs. Pre-approved. Do you know that there is a difference in a term that seems to be used interchangeably? To be pre-qualified means that your lender has given you a number of what you may be able to finance. Being pre-qualified doesn't meant that the lender will give you a loan nor does it carry any weight with a seller. To be pre-approved means that the lender has gone over your credit report, debt to income (expenses vs. income) and has determined that they will finance a home for yo up to a maximum amount. Your lender will give you a letter that states what you are pre-approved for.
Know What You Can Afford. Knowing what you can afford is a huge advantage for you and your agent. It gives you the maximum prices that would be financed but it also shows you what that mortgage payment would be and directs you to shop for a home within those figures. Looking at home when you don't have any clue on what you can borrow or what you can afford can be a disappointment and a big waste of time for you and your agent. When you have a pre-approval, your agent will help you find homes within your price range to look at.
Pre-approval - Power! Having a pre-approval all ready to go means that you have more negotiating power. Pre-approvals also mean business. Sellers who have their home shown to perspective buyers who have pre-approvals generally will accept those offers, even if they are less, because you have secured financing.
Fastrack to and Through Closing. When you find that perfect dream home and your offer has been accepted, putting you under contract, already being pre-approved for a mortgage can help to speed up the closing process, especially if you have more money to put down. The lender already has your information and they just need to complete the process.
No Surprises. Unexpected surprises is not something you want during the process of buying a home. There is no guarantee that surprises won't come up with the home itself, but at least since you know what you have been pre-approved for, you won't be disappointed to find a home that you can't get financed.
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