Currently, we are in a market where demand is greater than supply. There are more buyers competing for a limited number of homes for sale, and this is the number one reason why you should get pre-approval before you start looking at properties. Even if this is not the case there are many good reasons why you should start with pre-approval.
- You will know how much house you can afford. This saves you a lot of time from looking at properties that are out of your price range. I will also prevent unnecessary heart break when you fall in love with a house and found out later on that it is out of your reach.
- You will be better prepared. As part of the pre-approval process, you will know approximately how much money you need upfront for your purchase and how much you’ll be paying monthly going forward. This will put you in a homeowner mindset and helps you make a better decision.
- You can make an offer more quickly when you found the right house. You need to submit a pre-qualification or pre-approval letter with your offer in this market to show that you are qualified to make the purchase. In a fast moving market where multiple buyers compete for the same house, it is vital to have your pre-approval ready so you can make an offer quickly.
- Your offer will be more attractive than competing offers. With a pre-approval, your offer will be stronger than those with pre-qualification or with no financial qualification.
If you don’t know where to start, ask your Realtor. Your Realtor knows several good lenders that you can work with and get pre-approved quickly (usually within 24 hours), and help you save money by helping you shop for a lender that will provide you with the best rate and fee.