Oftentimes, when you are searching for a new home, it may seem obtaining a pre-approval for your mortgage loan is a waste of time and energy. However, there are some significant benefits to a pre-approval which should not be overlooked.
In many cases, buyers can use a pre-approval for leverage when
negotiating with sellers and may wind up buying a home for far less than
what the listed price is.
Knowing Your Limitations
One significant benefit of a mortgage pre-approval is knowing exactly
how much money you will be able to borrow. This means you will be
looking at homes you know you can afford.
Whether you are working on your own or you’ve sought the assistance
of a real estate broker, there will be no question in your mind how much
money you can spend.
Approaching A Seller
When someone is attempting to sell a home, chances are they are
either buying a new home or they are relocating. This means they may be
facing certain time constraints which can be difficult when they list
When sellers are faced with multiple offers, chances are the
potential buyer who has a pre-approval will often be the offer that is
accepted, even if it’s slightly lower than other buyers.
Benefits For The Seller
It may seem the seller has nothing to gain if they are taking less
money for their home simply because you have a pre-approval. However,
this is typically not the case.
Keep in mind the usual process is the buyer makes an offer, they
search for a loan and they may eventually get turned down for a
mortgage. This means the seller has to start the process all over again;
typically 30 to 60 days after they received the first offer.
A pre-approval can give you a great deal of negotiating power simply
because your lender has already validated your credit information, your
employment, debt and income.
This means when you begin negotiating with a seller, the time from
signing a purchase and sale agreement to closing your loan is typically