If you need reasons, besides your parents and realtor told you so, to get pre-approved for a home loan, here’s 5!
Your first step when considering buying a home should be to get pre-approved. This can and should happen before you even speak to a realtor about looking at homes. Your mortgage broker can help you with reviewing your monthly expenses and budgeting for the new home, and advise you on programs and strategies to get the most out of your home loan.
If you aren’t pre-approved before looking at homes, your agent and listing agents likely won’t view you as a serious buyer, and you could be wasting your and many other peoples time if your desires don’t match what your budget can handle.
When you go on a road trip, you don’t guess where you want to go or how to get there. No, you come up with a plan in advance. Home buying is a process like anything else. The more prepared you are, the smoother the process, and the more enjoyable it will be.
Here are 5 reasons to get pre-approved before shopping for a home:
Knowing Your Budget
One of the main reasons to get pre-approved for a mortgage before home shopping is to know exactly how much you can afford to spend on a property. This will not only save you time and energy by only looking at homes that fit within your budget, it will also ensure that you don’t fall in love with a home that you can’t afford. It can also help avoid some very awkward or embarrassing conversations for you and your real estate agent down the road.
Having a Strong and Serious Offer
Sellers will take your offer more seriously if they know that you have already been pre-approved for a mortgage, and that your financing is lined up. Some sellers and/or agents won’t accept offers without a pre-approval letter, which could leave the home on the market long enough for someone else to get it under contract. If you’re in a very competitive housing market, having a pre-approval letter can give you the edge you need over other unprepared buyers.
Many agents won’t show homes without a pre-approval letter, and really none should. Showing homes without a pre-approval letter shows a lack of experience, and while it may seem nice, they could be setting you up for an emotional roller coaster.
Less Stress
Planning in advance is always a good idea. Once you’ve found the perfect home, having a pre-approval letter can help speed up the closing process. Since the lender has already reviewed your income documents and other financial information to determine that you qualify for a loan, the underwriting process will be faster, smoother and a better experience overall.
Finding the best loan product
When you plan ahead you have time to better understand the current market conditions and loan products best suited for your situation and goals. This may even help you, your mortgage broker, and your real estate agent structure the transaction to get a better deal. Waiting until being under contract and rushing to get a loan will likely leave money on the table and ideal loan options overlooked.
Reviewing your Credit Score
Finally, getting pre-approved for a mortgage can give you time to improve your credit score or allow you to address items that you were unaware of. This is because your mortgage broker will perform, at the very least, a “soft pull” of your credit. This is to review your current monthly payments and outstanding debts, but often uncovers items the borrower is unaware of.
Additionally, if you are reviewing your credit before going under contract, you may have time to improve your credit score or remove incorrect items, which may make you eligible for more loan products and/or a better rates and loan terms.
5 Reasons To Get Pre-approved Before Home Shopping
In conclusion, getting pre-approved for a mortgage before home shopping has many benefits. It allows you to know your budget, make a stronger offer, minimize your stress, find the best loan, and allow the time to improve your credit score. Therefore, it is highly recommended to get pre-approved before starting your home search.
Get pre-approved today! You can begin your application here.
