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Why Pre-Approval Is An Important Step For Today’s Homebuyers

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Why Pre-Approval Is An Important Step For Today’s Homebuyers

By Paul Gardner | Industry Topics | Comments are Closed | 8 June, 2022 | 0

In today’s economy, house hunters need every advantage they can get when purchasing a

home.

That’s because the housing market is ultra-competitive right now. There are simply not enough

houses on the market to keep up with demand. So buyers need to be ready to move quickly

when they find the house they want to purchase.

That’s where pre-approval comes in. Getting pre-approved for a mortgage gives home buyers

an advantage over the competition. A pre-approval lets you know exactly how much money the

bank will loan you so you make your best offer quickly. The pre-approval also lets the seller

know you are qualified to buy the home which can help you secure a contract faster, keeping

the competition out.

While you can start your home search without a pre-approval, real estate agents recommend

taking this step first.

What is a Pre-Approval and Why is it so Important?

A mortgage pre-approval is assurance from your lender that it will provide you with funds to buy

a home up to a certain amount. The lender uses your credit score, income documentation, bank

statements, pay stubs, and other financial records to approve you to purchase a property. Once

pre-approved, the buyer receives a statement of the maximum amount he can spend on a new

home along with the estimated interest rate, closing costs, and monthly payments.

Keep in mind that this is not the same as a pre-qualification. A pre-qualification doesn’t use

accurate, verified information, only self-reported information, to provide buyers with an estimate

for what they can spend.

Though it requires more time and effort up front, the benefits of getting pre-approved far

outweigh the inconveniences:

● Makes you a more serious buyer. Sellers will take you and any offer you make more

seriously. They know your offer is less likely to fall through in the final stages if the bank

has already done its credit checks for pre-approval. This also gives you more negotiating

power.

● Gets you showings quicker. In some markets, real estate agents won’t show a house

to someone who isn’t pre-approved. Being pre-approved also helps you get a showing

quicker when a house you want hits the market.

● Speeds up the closing process. Closings can go faster because your financial

information is already in the lender’s system.

● Gives you confidence. Having a pre-approval lets you make offers confidently because

you know exactly what your borrowing limit is. It also eliminates unwelcome surprises

that may arise in the closing such as a poor credit score that may ultimately prevent you

from buying a home.

The bottom line is that even if pre-approvals aren’t required in your market, you should still

make the effort to get one before you start your home-buying journey.

It provides peace of mind to you, your real estate agent, and sellers that you are a serious

shopper, and it gives you the ability to move on a property quickly. In today’s highly competitive

market, this could make or break your chances at buying the home of your dreams.

Pre-Approval, Realtors, Title Industry, Title Insurance

Paul Gardner

Paul’s core practice centers on the examination of title and real estate transactions. He has extensive litigation experience, and has spent several years representing and advising lawyers, real estate agents, and insurance agents in connection with professional liability claims.

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