Get Pre-Approved First and Save Time Later
With multiple offers becoming more and more common, buyers who want an advantage in the bidding process will need more than just a mortgage prequalification. They will need a preapproval. Getting pre-qualified means you have not actually provided documentation for a loan and the mortgage lender has only your word on your income, assets and liabilities. However, a pre-approval means you have given the mortgage lender documentation on your income, assets and liabilities, so the information can be checked and verified. See below on why getting pre-approved has many advantages.
1. Negotiation Advantages
Having a preapproval for a mortgage lets homeowners know you are serious about buying a home. Owners may be debating between your offer and a higher offer from a buyer who hasn’t been pre-approved. Your status might make them a little more flexible with your terms. Knowing how much you can borrow will give you an advantage over your competition, especially if you get into a bidding war. You will be able to be more strategic about your offers and understand what an offer increase could do to your monthly payments.
2. Spend time looking at homes within your price range
Getting pre-approved first allows you to realistically manage your expectations when looking for a home.
3. You can purchase the home more quickly
Having a pre-approval allows you to make purchasing decisions. If you wait until you find a house to get pre-approved, you’ll have to take time out to find a mortgage company and compare products, which could take a long time and create risk of losing the home.