Though mortgage pre-approval is not vital to buying a house, getting approved before house-shopping can save home buyers time and energy in the long run. Mortgage pre-approval is necessary to make your offer stronger than other buyers’, but it offers several other benefits as well.
Here are The Top 6 Reasons Mortgage Pre-Approval is Necessary For Homebuyers
1. Beat the Competition
In a seller’s market, buyers tend to compete for the best homes in an area. This drives prices up, but it also increases the likelihood that your offer will be denied, or you’ll be out-bid. Once you find the house that you want, you want to make your offer as competitive as possible and mortgage pre-approval is necessary to back up your offer. Sellers generally want to close the house as quickly and neatly as buyers do, so they’ll be more likely to choose a more secure offer.
2. Faster Acceptance
Neither buyers nor sellers want to draw out the home close longer than they have to. There are a lot of steps involved in buying and selling a house already, and financing is the most complicated step in the chain. With your income verified, finances in order, and credit score checked during pre-approval, many of the lengthy steps behind the financing process will already be completed. This will help to finalize financing faster, allowing buyers and sellers to speed up the home sale process.
3. More Accurate Budget
It’s not uncommon for buyers to underestimate or overestimate the down payment or monthly payments they can afford, which can disrupt the home buying process right from the start. Mortgage pre-approval is necessary to help plan out monthly budgets before selecting a house, which will eliminate surprises down the road. This pre-planning step not only makes it easier to find the right house, but also ensures you can keep up with the payments once the purchase is complete.
4. Easier Home Search
A home search can be overwhelming at first; it’s difficult to know where to start or what to look for. With so many homes available, it’s easy to over-analyze and tough to decide which features are most important. Mortgage pre-approval shows what you can afford and allows you to narrow the field by price. When you compare only homes in your price range, you can more easily prioritize your needs. This is an ideal starting point, especially for first-time homebuyers.
5. Less Likely to Fall Through
There is nothing more disappointing in the home buying process than seeing your home sale fall through. The biggest problem to ruin many home purchases is financing. However, with mortgage pre-approval, your mortgage is significantly more likely to succeed. This way, you won’t have to hold your breath once your offer is accepted.
6. Better Organization
Mortgages are some of the largest loans banks give, meaning they also require the most paperwork. Lenders must be reasonably certain about your ability to pay back the loan, make the downpayment, and make payments on time. A number of documents are needed to finalize financing, including verification of your income, job, assets, and identity. Mortgage pre-approval is a necessary step to have these documents organized beforehand. Once your offer is accepted, mortgage pre-approval will ensure you’re not scrambling under a purchase agreement deadline.
Mortgage pre-approval is a necessary step to make your home purchase process as fast and easy as possible. The best time to obtain mortgage pre-approval is before home shopping, or at least before you submit an offer. If you’re confused about pre-approval or you’re afraid your credit score may be too low, consulting with an experienced realtor will help you learn more about your options.