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Is 2016 the year you’re going to buy your own home? Why not? Mortgage rates are still low and rents are skyrocketing. Before you start looking for sale homes online and attending open houses, you should be looking into getting pre-approved. Getting pre-approved means that a lender has looked at your financials and has deemed you creditable for a loan. When meeting with a loan officer, you’ll need proof of income, proof of assets, good credit, and employment verification. It may sound like a lot now, but down the road, you’ll be happy you did so. Here are 6 reasons you should get pre-approved.
Without it, most agents won’t work with you
Real estate agents invest hours upon hours on you, as well as much of their own money on marketing and advertising. They want assurance that all this hard work and money spent will pay off.
You’ll know how much you can afford
Getting pre-approved before you begin house hunting allows you to understand exactly what you can afford. The last thing you want is to fall in love with a home that you cannot afford. Getting pre-approved is also more time efficient.
It adds clout to your offer
With the housing marketing doing as well as it is right now, a home is most likely to receive more than one offer. If a seller is presented with two offers, they are more likely to go with the offer that is accompanied with a pre-approval letter. The letter instills confidence in the seller that you are financially capable of buying their home.
It could increase your negotiating power
Not only will a pre-approval letter give you the upper hand when placing your offer, but it will give your negotiating power. If you find a seller who is eager to sell, they may be more inclined to accept your lower offer. The seller will see that you are serious and capable of the price, giving them the incentive to accept.
It saves time
Applying for and obtaining a mortgage can be a lengthy process. By getting pre-approved, you shorten the time from contract to close. Once you find a home you’re ready to proceed with finalizing the mortgage.
It carries more weight than pre-qualification
The difference between getting pre-approved and a pre-qualification is that the approval letter shows that a lender has looked over your financials carefully and deemed you worthy. Pre-qualification can be handy when trying to figure out what you can afford, but they are not as accurate.