Getting Pre-Approved for a Mortgage Makes Buying Easy
Whether buying or selling a home, the real estate transaction
process can be seriously stressful. Hey, no pain, no gain.
Getting pre-approved for a mortgage can seriously reduce stress
levels.
Lender Approval
Many people make the mistake of going house hunting without
knowing exactly how a large a mortgage they can get. This leads
to incredible frustration when a dream home is found, but you
can't get a loan. For some shoppers, the frustration and stress
leads them to throw their arms in the air and give up on the
process. While an understandable reaction, the stress and
frustration can be greatly reduced by getting pre-approved for a
mortgage loan.
Getting pre-approved by a lender involves going through the full
mortgage application process. You are going to fill out all the
forms, provide tax returns or salary verification, have your
credit run and so on. The bank will do a full analysis regarding
whether you are mortgage worthy. It will also lay out the
specific requirements it expects you to meet including the down
payment amount and the specifications your potential home must
meet. To this end, the pre-approval process is always contingent
on the appraised price of the prospective home and any defects
found in the home inspection.
Once a lender approves you for a loan, a magical thing happens.
The lender will issue a pre-approval letter. The lender letter
indicates the bank has approved you for a loan, the specific
amount of the loan and often how long the pre-approval will
last.
The pre-approval letter is the golden egg in the home purchasing
process. It gives you a significant advantage over other people
bidding on the same home. Imagine you are a seller who receives
to bids within a few thousand dollars of each other. One bid has
a pre-approval letter from the lender and the other does not.
Which are you going to choose?
Getting pre-approved also has additional benefits. As you go
through the process, the bank may alert you to problems. You can
then go ahead and take the necessary steps to fix the loans.
Compare this to trying to get a loan while in escrow. You are
under a lot of pressure to get the loan in a thirty or sixty day
period. If you fail to get the loan, you lose your good faith
deposit, which is often thousands of dollars. Obviously, that is
a disaster.
Whenever possible, get pre-approved for a mortgage before
shopping for a home. It will save untold amounts of stress and
make the buying process much easier.