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Why get Pre-approval before buying a home?

Updated: Feb 4, 2023

The process of buying a home can be complicated and stressful, especially if you are going through it for the first time. In addition to all the steps involved with actually buying the house, you will have to deal with paperwork and regulations that can be confusing or frustrating—especially if you’re not sure what they are there for or why they matter.





One thing that can help simplify this process is getting pre-approved by your mortgage lender. Pre-approval means that you have established good credit history with them; your income has been verified; and they know how much money you can borrow based on your assets and liabilities (i.e., debts). Having been pre-approved means that when it comes time to look at homes or make offers on them, there won’t be as many surprises along the way because everyone knows exactly how much house they can afford!


It also saves time because instead of running credit checks each time someone applies for financing on a new property purchase, lenders will just check with their records since everything is already in place before any real estate agents start showing prospective clients around town


In case you find a house you like.


When you get pre-approved for a mortgage, the bank will tell you what the maximum amount they are willing to lend you. If you find a house that costs more than this amount, it's very likely that the seller will accept your offer if it's within their asking price range.


If there is another buyer who wants this house as well and can pay more than what you're offering, then he or she will win out because they have more money available for closing costs and other expenses associated with buying real estate.


To avoid disappointment later on.

  • To avoid disappointment later on.

  • You'll be able to determine how much you can afford and what type of mortgage program is best for your situation.

  • You'll know exactly how much down payment is required, which allows you to plan ahead for it.

To get the best financing terms and rates possible.


Pre-approval is a great way to get the best financing terms and rates possible.

  • Lenders will be more willing to negotiate with you. It's no secret that lenders like to make money, but they also want to keep their customers happy by offering competitive rates and terms. If they know that you've already been pre-approved by another lender and would be willing to take your business elsewhere, then they may be more inclined to give you what you want in order for them not lose out on your business altogether!

  • You could get a better interest rate if you are pre-approved versus applying for a mortgage after buying your home (and therefore having less leverage). Most lenders offer lower interest rates when they know they won't need as much documentation or verification from borrowers before issuing loans because of this exact scenario: being able to offer better pricing due simply because someone has already been deemed capable enough based on previous experience with other similar situations related specifically towards home ownership--which means less risk being taken out onto both sides involved here too (lender/borrower).


To establish a good credit history with your lender.


Establishing a good credit history with your lender can help you qualify for better mortgage rates. If you have a good credit history, it can help you get a lower interest rate and save money on your mortgage payments.


So you can save money by not having to pay for credit checks and appraisals each time you look at a new home.


So you can save money by not having to pay for credit checks and appraisals each time you look at a new home.


Once you are pre-approved for a loan, it's easier to negotiate with the seller when it comes time to buy your new home. They know that if they refuse your offer, there are plenty of other buyers out there who will be willing to pay more than what their asking price is.


Pre-approval can help you get the best deal on a home purchase.


Pre-approval is the act of getting a mortgage lender to agree to lend you money for a home purchase. The lender will examine your financial situation and determine whether or not they are willing to lend you the money. If they are, they will issue a letter stating that they have pre-approved you for a certain amount of money at a specific interest rate.

The benefits of having this letter in hand before making an offer on a home purchase include:

  • You can be more flexible with the price that you offer on real estate because it demonstrates that there is no shortage of lenders willing to fund your purchase. This gives sellers confidence in their asking price and makes negotiations easier for everyone involved!

  • It allows buyers who may not be ready yet financially but want something specific (like location) time until their finances improve before making any decisions about moving forward with buying property elsewhere where less desirable locations might exist.*

Conclusion


We hope this article has helped you understand the importance of pre-approval. It's a great way to save money, avoid disappointment and get the best deal on a home purchase. If you have any questions about getting pre-approved for your next house or condo purchase, contact us today!


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