Before you even look at one house in your home buying journey, you should secure a pre-approval letter from a mortgage lender. Having this in hand will show sellers that you are serious about buying a home and that you can afford what they are offering. Without this letter in hand, you are wasting your own time, that of your real estate agent and that of the sellers you visit.
In short, a pre-approval letter is a document from a mortgage lender stating what they would be willing to lend you. The dollar amount on the letter is the max amount they would consider lending you, based on your financials, job situation and more. It’s not a guaranteed loan offer, but it’s a jumping-off point that shows sellers you can afford to put an offer on their property.
Let’s take a look at why a pre-approved mortgage is so important when buying a home.
A Pre-Approval Letter Gives You More Buying Power
With a pre-approval already set up, you will be viewed as a more serious buyer by your real estate agent and sellers. It shows that you have the backing of a lender who has taken a look at your financial background and determined how much house you can afford.
A Pre-Approval Letter Saves Time
Looking for a home can be a long and arduous process. Don’t make the time commitment even longer by not having a clear idea of what you can afford. Being pre-approved saves you valuable time by showing you what your budget can handle so you can narrow down your search to homes within your price range. Looking at homes you can’t afford only wastes your time and energy.
A Pre-Approval Letter Gives You Bargaining Power
You will have more negotiating power as well, as sellers and real estate agents know you mean business. If you can afford the property or even well over the list price, you will be put in a favorable light with the seller, who will see you as a serious contender in the process
A Pre-Approval Letter Nixes Surprises
Talking to a mortgage lender before beginning your search will ensure there are no surprises when you go to make an offer. When you have all your ducks in a row early on, such as addressing a poor credit score or a questionable debt-to-income ratio, you are in a better position to act quickly when the time comes.
A Pre-Approval Letter Ensures Shorter Closing Periods
A pre-approval letter will expedite the closing process because all your financial information has already been collected and now resides in the lender’s system.
Contact Berkshire Hathaway Premier Properties
If you are starting out the home buying search, you will first need a pre-approval letter. Once you have that, or to get a referral to a mortgage lender, call one of our buyers’ agents to get started. Simply contact Berkshire Hathaway Premier Properties today at 713-862-0000.