Contrary to popular belief, pre-approval is not for the agent’s benefit. Loan pre-approval is to prove a buyer’s credibility to the seller. We as real estate experts tell home buyers that getting pre-approval is an essential first step for the following reasons.
You save time by looking at homes which you can actually afford and not be disappointed when you fall in love the “pie in the sky”. By decreasing the inventory of homes to those that fit your parameters, you can allot more time to thinking about all the little nuances each home has to offer.
Now when you find that perfect home, nobody can take it away from you by telling you that you do not qualify to buy it. You can minimize anxiety and remove last-minute loan surprises that could disqualify you. By getting that preapproval you have time to cure the possible credit issues that may be uncovered by the lender
A buyer increases their bargaining and negotiating power once they have that pre-approval. Sellers will be more likely to immediately accept your offer, even if that offer is for less than list price, because you are giving the seller peace of mind that her home is sold. She can take her home off the market and place it into pending status with confidence that the buyer is qualified to obtain a loan. Although the property still needs to qualify, for a seller, having the knowledge that the buyer can close is enormous. It will give your offer more credibility
You will enjoy a faster closing period because there is no window period while your loan application is processed, the lender can speed up the entire processing procedure. Appraisals can be ordered immediately which will often delay a closing if it is not ordered up front.
Because mortgage approval is generally the longest contingency to satisfy in a purchase contract, it is to your advantage to obtain a preapproval letter as soon as you’re ready to begin your search. Lenders will render a decision based on your complete loan application, reviewing bank accounts and other assets, employment verification and the data collected from three credit reports.