There’s one factor that stands between you and your dream home – a pre-approval. Most sellers won’t accept a bid without it. That’s right, you could lose the bid on your dream home if you don’t secure a pre-approval first.
That’s not the only reason – we’ve got 5 total reasons why getting pre-approved is the key to buying your dream home.
- You’ll know how much you can afford
Looking at homes is exciting and draining. Why waste your time on homes you can’t afford? Securing a pre-approval tells you how much you can afford, aka how much the lender will give you. Add it to your down payment and you have a total purchase price. This helps not only while you’re looking at homes, but when you make offers. You’re less likely to get caught up in the emotions and bid more than you can afford.
- Sellers give preference to pre-approved buyers
In a competitive market, sellers have their choice of buyers. If you don’t have a pre-approval, they may not show you the home. If they do, like we said initially, they won’t accept your bid. It’s too risky for them. They want a buyer they know can secure financing and won’t bail on the contract.
- You can budget
Looking at a mortgage payment on paper and actually paying it are two different things. When you’re pre-approved, you know the approximate size of your mortgage payment. As you look at homes, you can get used to the mortgage payment as a part of your budget. See how it feels and if you can comfortably afford it. If you take it, the payment is yours for potentially 30 years.
- You won’t be disappointed
There’s nothing worse than having your heart set on a home only to find out you can’t qualify for the mortgage you need. When you get pre-approved, the lender evaluates your credit, income, debts, and assets. They tell you how much you can afford based on the information you provide rather than you assuming what they’ll give you.
- You can close faster
With a good portion of the underwriting process completed, you are closer to the closing than you think. Underwriting is a big part of the ‘lag time’ between the offer and the closing. After the pre-approval, underwriters wait for the property information including the appraisal and title work, and then you’re well on your way to closing in a shorter time.
We strongly encourage you to get pre-approved before looking at homes, especially in today’s environment. Sellers only want qualified buyers looking at their homes and/or making bids. They don’t want to waste anyone’s time and many can’t risk losing a contract because of a lack of financing. With a solid pre-approval in hand, your ‘clout’ as a buyer increases tenfold. You’ll be more confident, know what you can afford, and save time by avoiding homes you otherwise couldn’t afford.
