Are you considering going through the mortgage pre-approval process before you begin your search for a home? Great idea! A couple of the most common situations you may avoid by making this smart decision include:
Being turned down by an agent or seller to look at a home. This isn’t because they don’t want to help but simply because they won’t know if you can afford the home or are serious about buying.
Falling in love with a home that you cannot afford. What if you found a place that was perfect for you, but it was way outside of your budget? This could lead to a lot of stress, frustration, and disappointment for you, the seller, and your agent.
Obtaining a mortgage pre-approval letter makes sense when you consider the stress that can be caused without it. The situations listed above are some of the most common, but they are not the only ones that may be experienced.
By taking the time to get pre-approved before beginning to shop, you’ll have evidence of your ability to pay and the fact that you’re serious about buying as well. Real estate agents and sellers alike will appreciate this and be eager to work with you as a result.
If you want to get the home buying process started with confidence, then taking the time to get a pre-approval is necessary to make sure that you are ready to buy a home.
The first step is to find a mortgage lender, who will run your credit and obtain important financial information in order to determine your eligibility. Fortunately, once this is over and you have been pre-approved, you can begin shopping for your next home. With that pre-approval in hand, you’ll be treated as a serious buyer from the very first phone call, whether you’re speaking with an agent or seller.
PRE-APPROVAL LETTER
This letter, while it may not seem like a vital document to you, is incredibly important to real estate agents and home sellers. A mortgage pre-approval letter is an evidence of how much real estate you can afford and that you’re serious about taking the next step when buying a home. However, it’s important to keep in mind that while a pre-approval letter does carry weight, it is not a guarantee of a loan. Fortunately, it’s proof enough that you’re capable of buying, which is why agents and sellers value it so much.
HOW TO GET ONE?
Getting a pre-approval letter is easier than you might think. Once you have selected your lender and received the thumbs-up from them to go and look for a home, you can ask them for an official letter to confirm their statement.
It is a very common practice in the real estate and banking industry to obtain a mortgage pre-approval letter. When you’re working with a reputable mortgage team, providing this letter should be standard practice for them.
BENEFITS OF A MORTGAGE PRE-APPROVAL LETTER?
1. Pre-approval Letter Provides Proof of Financing
Most real estate agents request that clients obtain pre-approval before they ever show them a home. This is for good reason, as it’s an unfortunate reality that unqualified buyers waste their time and therefore money. Agents want security that their clients have the ability to buy, which is exactly what this letter shows.
2. Negotiate Better Price & Term
Do you want to be in a better position to negotiate on a home you love? A pre-approval letter will help, as it proves you have the funds and therefore the deal is more likely to go through. Even if a seller has multiple offers, you may gain an advantage over the others if they haven’t shown proof with a pre-approval. This letter is also paramount if you’re buying in an area that’s high in demand, as some sellers may not even consider working with buyers who aren’t pre-qualified. To make yourself stand out, even more - work with a reputable lender. If you aren’t sure who to go to, ask your real estate agent for referrals.
3. Savvy Sellers Want to See Proof of Approval
An additional reason why top real estate agents request pre-approvals from buyers is the fact that an increasing number of sellers actually require it. This is because sellers only want to work with serious buyers who aren’t going to waste their time. They want security in knowing that the buyer is serious and financially capable of affording their property, which is exactly what the pre-approval letter shows.
Of course, you can attend an open house because agents cannot screen walk-ins for this, but if you want a private showing, don’t take it personally if the agent asks you for your pre-approval letter first. Plan on making an offer? Your letter of approval will ease the seller’s mind because they won’t have to just take your word for being able to afford their property.
4. Pre-approval Reduces Condition Time
Obtaining a mortgage takes a lot of time, as you have to prove your income, dig up financial records, and meet all requirements of the lender. Fortunately, if you get pre-approval ahead of time, this process can actually be shortened considerably. While this takes a lot of stress off of your shoulders, that’s not the only advantage.
Sellers absolutely love buyers with a mortgage pre-approval letter, as it decreases the amount of time they have to wait between accepting an offer and removing all of the contingencies.
5. A Good Real Estate Agent Will Not Work With Un-approved Buyers
Real estate agents work hard for their clients by showing them properties, negotiating for them, and helping you navigate through the buying process. With all the time they invest in you, it’s easy to see why they want to make sure you’re a serious buyer from the start. This provides them with security that you’re not casually browsing and can actually afford the homes that you want them to show you.
To ensure a more enjoyable experience for both you and your agent, get pre-approved before beginning the process. Your real estate agent will greatly appreciate you having a mortgage pre-approval letter and will be able to get started assisting you much more quickly.