Are you ready to buy a new home? Then be sure and watch this video to find out the difference between pre-qualified and pre-approved, as well as why you should get pre-approved first:
Being pre-approved is one of the initial steps in the home-buying process. To understand why pre-approval is such a vital step, you must first grasp what it is and what it accomplishes for you. According to Business Insider:
In a preapproval [sic], the lender tells you which types of loans you may be eligible to take out, how much you may be approved to borrow, and what your rate could be.
Pre-approval essentially provides you with vital information about the home-buying process that will assist you in understanding your options and how much you may be able to borrow.
How does it work? A lender will examine your finances as part of the pre-approval process to decide how much money they are willing to lend you. Your lender will then provide you with a pre-approval letter to help you understand how much money you can borrow. This can make it easy when you go house hunting because you’ll know your total stats. Moreover, with increasing mortgage rates affecting affordability for many buyers today, knowing your figures is even more crucial.
Pre-Approval Shows Sellers You Are A Serious Buyer
Another advantage is that pre-approval might make a seller more confident in your offer because it shows you’re serious about purchasing their home. According to a recent Forbes article:
From the seller’s perspective, a preapproval [sic] letter from a reputable local lender often can make the difference between accepting and rejecting an offer.
This demonstrates that, while you may not encounter the tremendous bidding wars seen during the pandemic, pre-approval is still a crucial aspect of creating a solid offer. According to Christy Bieber, Personal Financial Editor at The Motley Fool, says it may be the most crucial component of making an offer:
Pre-approval maximizes the chances you’ll be able to actually close the deal – and sellers want to see that.
The fact that a pre-approval gives you a better chance of getting your offer accepted is undoubtedly the most important reason to complete this step . . .
Summing It Up
Being pre-approved is a critical first step in the home-buying process. It informs you of your borrowing capacity and demonstrates to sellers that you are serious about purchasing their home. If you are in the market for a new home and need to connect with a reputable lender, get in touch, we’ll be more than happy to connect you with our favorite mortgage brokers. You can reach us at 404-410-6465 or visit CompleteRealtyTeam.com. Thanks – and until next time!