Facts About Loan Offers & Pre-approvals
Although many of the ‘pre-qualification’ letters you get through the mail are worthless, there are types of pre-approval from lenders that can help you when buying a house. If you can get pre-approval on your mortgage loan, then you will find it much easier to get the house you want quickly. What’s the difference between a pre-qualification and a pre-approval letter? Read on to learn more.
Apply before you buy
Although many people used to look at homes before applying for a mortgage loan, nowadays it is critical that you apply for the loan first. This will allow you to know exactly how much you can afford to spend on a house and find the property you want much more quickly and easily.
Pre-approval and pre-qualification
Although you might have a great credit rating and a good job and know you will be accepted for a mortgage, it is much better to apply and get pre-approval than to simply be pre-qualified. Pre-qualified simply means you are eligible to apply for a mortgage loan but does not guarantee the amount that you will receive. However, getting a pre-approval letter will tell you exactly how much you will be allowed to borrow. As long as your circumstances do not change, this amount is guaranteed.
Getting pre-approval
To get a pre-approval letter, you simply start with a loan application with a lender. They will perform the necessary checks such as run your credit and gather your documents, then give you a pre-approval letter. After you receive your pre-approval letter you can start searching for your dream home.
Looking at the right homes
If you have pre-approval, then you know exactly how much you can afford to spend on a property, and so can narrow your search down to homes within this price bracket. This will help you find a property to match your needs much more quickly and make buying easier.
More negotiating power
If you have pre-approval on your mortgage loan, then you will be seen in the same way as a cash buyer. You already have the funds in place, so the seller is more likely to accept an offer immediately, even if it is below the price estimate. This is because they can be more certain that their house is sold, and so take it off the market pending the close of sale.
Quicker sale closing
One of the lengthiest parts of house buying and selling is the closing of the sale. If you have agreed to buy a house but do not have a mortgage in place, then it can take time to arrange the funds, and you might even find that you cannot get the funds you need. However, if you have a pre-approval, the funds are already guaranteed, and you can push through the transaction much more quickly. This will make buying a house much less stressful, and help you to get the home you really want.
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