Are you in the market for a new home? If so, it’s important to get pre-approved for a home loan before you start house hunting.
Why should you make pre-approval a priority? We’ve put together a short list below that explains everything you need to know.
But first, let’s answer an important question …
In the simplest terms, mortgage pre-approval is the process of determining how much money you can borrow to buy a home.
To get pre-approved, you’ll need to submit some financial information to your lender, including your income, debts, and assets. The lender will then use this information, along with a credit check, to determine whether you’re a good candidate for a loan.
If you’re pre-approved, you’ll receive a letter from the lender outlining the terms of the loan, including the interest rate, monthly payments, and down payment amount.
Remember: Pre-approval is not a guarantee of loan approval, but it does give you a better chance of getting approved and can help the home-buying process go much more smoothly.
- Clarity on Your Home-Buying Budget
Unless you want to end up frustrated and disappointed, you’ll need a realistic budget to work with from the start. Once you’re pre-approved for a loan, you’ll know exactly how much house you can afford so you can focus only on the homes that fit within your budget—and you won’t be in danger of falling in love with a home that’s out of your price range.
- Increased Negotiating Power
In a competitive housing market, being pre-approved can give you an edge over other buyers who haven’t gone through this process yet. If you have a mortgage pre-approval letter in hand when you’re ready to make an offer, the sellers will know you’re serious and that you should be able to follow through on the purchase.
If you put in an offer without a pre-approval letter, there’s always a chance the seller will choose another buyer—after all, there are plenty of other buyers out there who have already been pre-approved.
- Faster Closing Process
Because the lender has already evaluated your finances, getting the actual loan should be quicker and easier.
- Reduce Stress
Going through the pre-approval process can help relieve some of the stress that comes with buying a home, since you’ll know exactly what kind of loan you’re eligible for ahead of time.
- Rate Lock Options
Some lenders offer rate lock options, so even if rates increase after you’re pre-approved, your loan’s interest rate won’t go up.
This may or may not be the best option for you, so be sure to work with a lender you trust who will offer you the best loan options for your unique situation.
Hopefully, it’s clear that going through the pre-approval process is one of the smartest things you can do—whether you’re buying your first home or your 50th.
At Provident Lending Group, we have helped thousands of home buyers get pre-approved and we’d love to help you, too.
Contact a Provident Lending Group mortgage professional today to get started on your path to a new home!
Provident Lending Group – Home Loans Made Simple