If you’re planning to qualify for a loan and buy a home, you may have heard the term “pre-approval” and wondered if it was necessary. Well, loan pre-approval makes the buying process easier and can help you to be more successful when it comes to purchasing the home of your dreams.
So, what exactly is pre-approval, and how can it benefit you? Let’s discuss!
What is Pre-Approval for a Home Loan?
The term “pre-approval” refers to an evaluation process where a lender determines how much money they are willing to loan you for the purchase of your home. Generally, this figure is calculated based on a thorough review of your credit and financial histories.
What are the Benefits of Home Loan Pre-Approval?
Home loan pre-approval benefits buyers in the following ways:
Shows Buyer Intent
Provides a Strategic Advantage
Gives More Room to Negotiate
Helps to Approximate Budget & Monthly Payments
Sets Proper Expectations
Saves Time While House-Hunting...
...and During Closing
First, pre-approval shows a seller that you are serious about purchasing a home. It also lets them know that you can afford the property. This gives you an advantage over other potential buyers who may not have been pre-approved.
After all, sellers want to be sure that a buyer has the financial ability to purchase their home. Pre-approval assures them that you can.
In fact, sellers are more likely to accept offers from buyers who are already pre-approved for a loan. They’re also more willing to negotiate with you, since pre-approval shows that you’re serious about—and willing to—purchase a home. This offers you a strategic edge in a highly competitive “buyer’s market.”
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