Why you should obtain a pre-approval before looking for property.

Before you seriously decide to go into the housing market to find your next home, you should first determine how much of a mortgage you can be approved for. As a real estate agent and a mortgage broker, I can tell you this is one of the most crucial steps in helping buyers to be successful with their home search.

Most home buyers have a good idea of what area and what type of house they are interested in. In terms of knowing what is needed to obtain a good mortgage and how much they can be approved for is something most buyers don’t know. Therefore, the first task for any potential home buyer is to find out what it takes to get pre-approved for a new mortgage based on their current financial situation. Obtaining a pre-approval will help the home buyers to set the proper expectations what their home buying process will be. Below are several benefits of getting a pre-approval.

1. When you put an offer in, it is often required that you can show the seller you have the ability to obtain a mortgage. Having the pre-approval letter in hand will validate that you have ALREADY gone thru the initial loan process and been approved for a mortgage with a lender. Without the pre-approval, your offer will most likely not be considered.

2. When you go thru the process of obtaining a pre-approval, you will learn what the lender’s requirements are to get approved for a mortgage. If your current financial situation does not meet the requirements, then you have time to resolve any issues to meet these requirements BEFORE you enter into a sales contract to buy the home. The last thing buyers and sellers want is to have a lender not approving the loan while in escrow.

3. After your pre-approval is done, you will know what the maximum home price you can buy based on the approved loan amount and your downpayment. This information will help you to determine if the type of home and area you want to buy in is possible with your maximum approved purchase price. If the approved purchase price is not enough to meet your home search criteria, then you will have to make some concession by either looking at smaller homes or different neighborhoods. Either way, by knowing how much you can buy will set the right expectations for you and help you develop a strategy to find your next home.

4. Having a pre-approval done will give you confidence in your ability to buy the home. With the pre-approval in hand, you have already done majority of the work in obtaining the loan. Now you can concentrate fully on the home itself, review reports and inspections, and any other items that are important to you in your decision-making process. This will make your home buying process much simpler and less stressful.

If you are thinking about going into the housing market definitely you should start with the pre-approval process. Give me a call and we can discuss how to proceed.

Cheers.

Nelson