Buying a house is an exciting time. You are taking a giant leap towards homeownership and making one of the most large-scale investments of your life. Or perhaps you’ve already had a home and are considering upsizing or downsizing into a new property. Regardless of the personal circumstance that applies to you, it is typically true that looking at the possibilities for your future home is often your first priority.
However, some things need to be done before stepping foot into any prospective property. The mortgage pre-approval is one of those things. It is a critical part of the home buying process for many reasons.
Buyer Confirmation
You want to get a mortgage pre-approval because it will determine if you can even buy a home at all. There is no point in hiring a REALTOR®, going over your wants and needs, and looking at homes, if you cannot get approved for a mortgage.
A pre-approval gives you and your REALTOR® peace of mind. When you do find a property, you will have the funds to put in an offer. Without that, everything else is just playing make-believe.
Obtainable House Hunting
A pre-approval also sets you up with a spending limit, and when house hunting, that spending limit is a vital factor that goes into what homes you visit. For example, if you have been pre-approved for a mortgage at $800,000, going to look at $1 million homes would be a waste of your precious time.
With so many properties to look at, you want to focus on homes that you can afford and are feasible with your pre-approval rate.
It Makes You A More Attractive Buyer
In a seller’s market, demand is high, but inventory is low. You may have to compete with buyers when you do end up finding a property you love. Now, not all people will have gotten a mortgage pre-approval, but that is where you will have a leg up over the competition.
Sellers will want to know that a deal will not fall through after the initial offer and acceptance period. When you are pre-approved, it gives the seller more confidence that you are a serious buyer and are ready to take possession of their property.
Negotiation Assistance
Negotiations are paramount when it comes to purchasing and selling a home. Having a mortgage pre-approval offers you flexibility when it comes to bargaining or negotiating on the list price. As mentioned above, sellers want a sure thing when they’re selling their homes and accepting offers.
If you have a mortgage pre-approval but are negotiating on the price, they may end up choosing your offer over others because the sale is less likely to fall apart. Overall, having a mortgage pre-approval strengthens your position when having your needs or demands met during the sale process.
Getting a pre-approval for a mortgage should be the very first step you take when looking to buy a new home or property. The benefits are well worth it, and it will make the entire process that much easier.
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