In an article on Bankrate, Michael Highfield, head of Mississippi State University’s Department of Finance and Economics advised that homebuyers get pre-approved before house hunting. He said, “In this competitive market, any serious buyer should pursue a preapproval from a lender in advance to beginning a home search.” Getting pre-approved can help you buy the home of your dreams and beat out the competition for a popular listing.
Understand Your Finances
By getting pre-approved before searching for houses, you’ll know how much of a loan you qualify for and about how much your house payment will be. This helps you narrow down the search to homes you can afford instead of leaving the playing field completely wide open.
This will also help your real estate agent match what you can afford with what you need. You’ll save time by looking at listings in your price range.
Get a Leg Up on Other House Hunters
In a competitive market, several offers may come in for a desirable listing. For example, say you find a home you adore in the neighborhood you desire and make an offer on it. Unfortunately, two other couples also adore that same house and make offers at the same time.
If all three offers are similar, but you’re already pre-approved for a loan, the seller may take your offer over the others because he doesn’t risk that the buyer may not be able to secure the loan after going through the financing process. In this type of scenario, getting pre-approved helps you buy the home of your dreams over others who were not pre-approved.
Make the Process Go Smoother
Another reason to get pre-approved is that you’ll split up the mounds of mortgage paperwork that must be completed to purchase a home. Being pre-approved will make the entire process go smoother which can speed up the amount of time between making an offer, having that offer accepted and closing on your new house.
Some Properties May Require Pre-Approval
Another reason why getting pre-approved can help you buy the home of your dreams is that some properties or sellers may request only pre-approved offers. For example, bank owned properties (repossessions) will sometimes require pre-approval before accepting an offer on the home. If a seller needs to sell quickly because of a pending transfer to another town or other time sensitive issues, he may also request pre-approval before accepting an offer and getting tied into one buyer.
In order to get pre-approved, you’ll need to provide any banks you’re applying to with a few key points of information. Most banks request info such as how much you plan to pay down, how much income your family has, ability to verify your credit score and other personal information.
To connect with home loan officers and figure out how much home you can afford, team up with real estate professionals like Daniel and Bonnie Wan. You can count on Team Wan to offer solid advice and help you find the home of your dreams on any budget.