Before you start looking for houses to buy, getting pre-approval should be your main priority for several significantly important reasons. As the number of people looking for houses increase and the number of actual homes decreases, the sellers are at a huge advantage. This sparks up heavy competition amongst the buyers, which leads to an increase in prices overall and makes it very tough for people to find their preferred houses unless they’re financially very strong. However, to escape the chaos, we’ve tallied down a few reasons why you should absolutely aim towards getting pre-approval before you actually buy a house.
What Is Pre-Approval?
Firstly, you need to have a deep understanding of what the term actually means before proceeding further. When you get pre-approved for mortgage, it means that the bank has reviewed your financial history and credit scores by which they write you a pre-approval letter. This letter includes the amount they can lend you for a mortgage, which varies according to your current financial standing. However, this in no way acts as a legal binding contract. It also doesn’t mean that you’ll receive the approved rate. It’s just a document that will help you search for a house more smoothly.
1. Get a Competitive Advantage
As we’re short on inventory at this time, people looking for houses are in need of any advantage available to make a deal. A way to get ahead of your competitors is by getting mortgage pre-approval before you take any step further. This shows that you’re actually serious about the matter, which will act as a huge benefit in the long run. Otherwise, realtors or sellers will not take you seriously.
2. Faster Home-buying Process
Pre-approval will significantly contribute to the acceleration of the process, which means, in the intensely competitive environment of today, you have to be ready to move when the time comes so you end up living in the house you’ve always desired!
3. Can Help In Solving Financial Issues
Probably one of the biggest advantages of getting pre-approval is that you know where you stand financially, what you can afford and whether you qualify for a mortgage or not. This helps in rationalizing your choices and prevents you from selecting a house that is far beyond your reach financially. Moreover, the paperwork involved gives the lenders a thorough understanding of your financial status, with which they can give you effective advice on how to tackle your problems.
Doesn’t matter if after applying for pre-approval you find out that you’re not yet ready to start house shopping yet because this way you can plan accordingly and with time, save enough to step into your dream house!
Conclusion
Even though there are still a lot of other steps you need to follow before you can actually settle in, getting pre-approval is the first move necessary to get you on the right track for the additional processes. Make sure you have a competitive edge if you really want your own house!
