Posted by: rgmorgan | July 8, 2009

Why Pre-Approval is important when buying Real Estate

“My agent said we needed to get pre-approval for our loan before looking for a house. I don’t understand why that is important to us.” Many people feel that agents do this to make sure the buyer is real and has the ability to actually purchase a home. While there is some truth to this the reasons are much greater than that.

How do you know how much home you can afford? If you don’t know that you may waste your valuable time looking for a home you can never afford or you may find you can afford a larger home or one in a neighborhood you didn’t think you could. It allows you to focus on properties you want in a price range you can afford.  

The pre-approval process will also uncover any credit issues that you may not even know exist. It allows you to clear up any mistakes on your credit report so when you get ready for home financing these obstacles are gone.

Any offer from a buyer who is pre-approved has more clout because the seller recognizes you as a serious buyer who has invested the time to be pre-approved. Your offer may be considered above one from someone without pre-approval. In today’s market with short sales and foreclosures many times pre-approval is required before any offer is even considered.

To be pre-approved you must work with a reputable lender. They will require documentation of income, savings, credit history and other items. The result will be a good faith estimate that will show you basic loan terms. This is a tool that you can use, if you choose, to shop lenders to get the best loan for you.

Does pre-approval mean that you will get the loan for the home you select? Not necessarily, there are other factors that must also fit such as the appraisal of the property selected. It’s a big step towards getting the loan and paves the way for a smoother transaction but until you have selected the property and made an accepted offer the lender cannot commit.

If you want to learn more about pre-approval please visit the mortgage link under Important Links or More Information. You can visit with your own lender and/or if you need other lender’s contact information I will be happy to provide some I have used in the past.

Good luck!!!

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