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Why You Shouldn't Bypass the Pre-Approval Process
Our REALTORS® at Haring Realty strive to make homebuying easier. When looking at Mansfield and Ashland homes for sale, clients often have lots of questions. It's no surprise concerns around financing are common. That's not just true for first-time homebuyers, either: Whether they're buying a first place or a place to retire, everyone wants the best deal.
But the process of getting a mortgage can be complex. It's easy to get confused, which is one reason why the right real estate pro is such a valuable ally. One question that often doesn't get asked – because buyers don't have all the information at first – is this: "How does pre-approval affect my home search?"
Pre-approval can have a positive impact on your finances and the whole buying process.
Here's what to know.
What Is Mortgage Pre-Approval?
In effect, mortgage pre-approval means doing what you'll eventually need to do anyway – but getting it done sooner and enjoying some great advantages as a result. In pre-approval, a lender takes a detailed look at all of your financial information, income, debts, and more, and decides just how much money you can borrow.
Pre-approval differs from pre-qualification, a related process. In pre-qualification, you have a conversation with a lender about your finances and they may provide a rough estimate of your potential loan amount. You can't "lock in" a particular loan amount until the lender reviews your finances in detail.
With that in mind, buyers can go right to pre-approval as soon as they know they are on the market.
Mortgage pre-approval does not guarantee you will get the full loan amount for the specific house you want: For example, you still need to perform a home inspection, and if the property is found to be dangerous, the lender will not back the loan. But it does mean you have a concrete idea of your budget if all goes as planned.
What Are the Benefits of Mortgage Pre-Approval?
If you are sure you want to buy a home soon, the benefits of pre-approval are undeniable:
- You Can Gain a Seller's Confidence
Sellers are often motivated to move their properties as quickly as possible. One way they can do so is by making sure they are only dealing with fully qualified buyers. Once you are pre-approved, you'll receive a letter from your bank or other lending institution showing that you've advanced a long way in your funding process. - You Can Act Faster Than Other Buyers
After you are pre-approved, you don't have to wait a single day to make a bid on a qualifying home. The most desirable homes can attract lots of attention, and the most prepared buyer often wins. You even have a chance to remain competitive if another buyer, such as an investor, shows up with cash in hand. - You Can Speed Up Your Home Purchase
Even if buyers aren't beating a path to your would-be home, it is still a good idea to pre-approve. All in all, you could save weeks of time. That may represent hundreds of dollars you save in living expenses at your current abode. You can work on the logistics of your move knowing closing day will arrive all the sooner. - You Are Less Likely to Be Disappointed
Although you can always check with multiple lenders, your pre-approval represents a concrete statement of your homebuying budget. This is extremely helpful for narrowing down your search to properties you are most likely to afford. With money squared away, you can put your other home priorities in focus.
Contact us to learn more or get started on your home search.
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