What is Mortgage Pre-Approval?
When you first begin the home buying process, you might hear talk about being prequalified or obtaining a mortgage pre-approval. However most may not know the difference between the two, why they’re important, or the benefits that talking with a lender, when you're ready to start the home buying process, will bring.
When getting a mortgage preapproval, it’s important to remember that it is not the same as getting pre-qualified. When your mortgage or loan is pre-qualified, that means that you have an estimate about how much you can afford based on the information you provide them. Your income and assets have not been verified. Whereas, when your mortgage is pre-approved, lenders have gone in and checked your credit, your bank statements, and other important documentation to approve you for a specific loan amount. Preapproval does not bind you to a particular company, so make sure you research your options to find a lender that is right for you.
What are the benefits that come with Mortgage Pre-approval?
Financially Solvent: Going through the mortgage loan pre-approval process, removes much of the guesswork and doubts as to whether or not you are financially capable of purchasing a home.
The Price is Right: By obtaining a mortgage pre-approval, you are able to determine the price range of homes you can afford. There is nothing worse than falling in love with a home, only to discover that it is out of your price range. Conversely, without mortgage loan pre-approval, you could possibly short change yourself, and end up missing out on a home that you could qualify for.
Stronger Buyer: Getting your mortgage pre-approved will also help you appear more attractive to sellers. When you make an offer on a home, after being preapproved- the seller can take your offer seriously. This is most important in multi-offer scenarios. So if you have your eye on the home of your dreams, be sure to get pre-approved.
More and more of today's sellers and their listing agents are requiring that any offers being submitted should be accompanied by a mortgage pre-approval letter from the buyer's lender. Make sure that you're fully prepared for your house hunting adventure by obtaining a mortgage loan pre-approval letter from your mortgage lender before you begin to look for your dream home.
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