In a nutshell… to beat your competition.
There’s nothing more disheartening than to fall in love with a home and then find out you can’t afford to buy it.
It is so important that before you start home shopping, you first consult with a mortgage lender. Not everyone needs a mortgage to buy a home, but almost all first-time buyers need a mortgage to finance their home purchase.
Therefore, get prepared before you look.
When you’re knowledgeable of what you can afford, it will focus your search and allow you to make a move when you find a home you love.
What does being pre-approved mean?
A pre-approval letter is provided to you by the lender after they have taken a deeper look at your finances and can approve you for mortgage loan based on your current financial situation and the documentation that you have provided (proof of income, tax returns, bank statements, pay stubs, etc).
A pre-qualification letter simply states the amount a lender thinks you’ll be able to borrow based on your income and credit profile without any actual documentation.
Some lenders are so thorough that, in special circumstances, they may have your file reviewed by an underwriter first to ensure that they are able to lend you the mortgage loan.
1. Beats your competition!
Serious sellers want to work with serious buyers. Many sellers only entertain offers from qualified buyers to save time and money.
2. Makes your offer stand out
Especially in multiple offer situations, you definitely want to stand out by showing the seller that a lender has already approved you for mortgage financing.
3. Saves you time, energy, and money
There are hundreds of homes on the market, but not all of them meet your criteria or are within your financial goals.
By concentrating your efforts on homes that are within your budget and meet your criteria, such as location, desired neighborhood, home features, etc., you will:
- Save lots of your already limited time
- Focus your energy on homes that are great candidates, and
- Save a ton on gas money!
Being pre-approved will make the entire process go smoother and help you buy the home you love!