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 their home.
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 significantly shortened.
Sean Young
Sean has been a Mortgage Loan Officer in the great State of Colorado for the last 25 years, a nationally recognized real estate blogger who loves teaching Social Media, Real Estate Technology, and Continuing Education classes. Sean provides weekly Real Estate Agent Tuesday Webinars that give the latest marketing strategies and tips on how to grow, build, and increase your visibility, credibility, and brand as a Real Estate Agent. Looking for a Home Loan? Sean and his team can provide you with the expertise, professionalism, and customer service that will ensure that your transaction goes smoothly.
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