The Benefits of Pre-Approval
What is Pre-Approval?
If seeking a loan, all perspective home buyers need to be pre-approved in order to buy a house. Consider pre-approval as a lender saying upfront that they want to work with you. Pre-approval happens before you start your home search or in the very early stages, certainly before you know which house you want to buy. After you apply for pre-approval, the bank researches your credit history and assets. If the bank is confident in your ability to repay your loan, they’ll pre-approve you. This signals to sellers that you unquestionably have the means to purchase their home.
While mortgage brokers work hard to establish good relationships with their customers and generally provide excellent customer service, you are not obligated to work with the company you choose to pre-approve you. After you have a property under agreement you are welcome to shop around for a better rate.
Benefits of Pre-Approval
Pre-approval means having a discussion with a lender who explains to you what you can expect to afford at the current rates. You will share information about your income, assets, other important financial information, and your time frame for purchasing a home. Some people choose to have family members help with the down payment. Lenders have specific instructions about this process, and more upfront time may be required. The lender will also calculate property taxes and homeowner’s insurance so you have a full picture of the expense of the home. Pre-approval clarifies your budget and gives you clear options.
A pre-approved home loan is an assurance to you as well as the seller that you’ve been verified by the bank and are capable of purchasing the property.