What Are the Benefits of a Mortgage Pre-Approval?

If you are buying a home and intend to obtain financing then they are several reasons why you should get a loan pre-approval before the commencing of transaction.

What is Loan Pre-Approval and why it is Essential for Home Buyers

A loan pre-approval is evaluation your credit and financials, such as tax returns employment and bank accounts. in order to determine your eligibility for financing. As a prospective buyer, having a loan pre-approval, following by a pre-approval letter can be a great asset and advantage for you as a buyer to support your realtor to negotiate a purchase for you in order to obtain the best deal.

Couple smiling across the table from a woman who is talking to them about the home buying process.
Small toy house placed next to a stack of quarters and toy bags of money.

It Can Help You Close Faster

The time to close the purchase is determined by the purchase agreement and is on average 45 days. For refinancing it is usually 30 days plus. The first step of closing on a home is securing the financing before shopping for it. So having a pre-approval letter will enable you to skip this step and close in faster, which means you get to move into your new house sooner. By skipping the first stage which is securing the finances, you can go straight to inspection and appraisal. If you are lucky and the seller also wants to close faster, then the process might be shorter than you expect.

Man handing over a house key to a new homeowner.

It Helps You Narrow Your Search

Look at it this way, buying a house is like deciding where you want to go for dinner, the sheer number of restaurants is endless. However, if you fix yourself on a budget, then you will be able to know where to go or not to go. The housing market operates this way too, so by securing a pre-approval you will be able to focus only on the houses you can afford. Nonetheless, getting a pre-approval doesn’t necessarily mean you will get the loan. But if there are not any unreasonable changes you can assume that you will get the financing.

Estate agent pointing finger on document showing total cost.

You Have Room to Negotiate

Apart from narrowing down your search, a pre-approval gives you the room to negotiate and bargain with the seller. Remember sellers who know that a buyer is ready and willing to buy often make some compromises if it will mean closing on the house. Whether it is getting the seller to buy you a home warranty or get some repairs done, a pre-approval letter will help you achieve all these.

Prior to applying for a pre-approval, first, make sure your credit score is good and you don’t have too much debt. When you are ready contact us at CalSun Mortgage and we will get you a pre-approval.