What is a pre-approval and why do I need one?A pre-approval letter is a commitment from a lender to provide you with financing up to a certain amount. It is supplied by a lender prior to actually
Why Having a Pre-Approval is Important
What is a pre-approval and why do I need one?
A pre-approval letter is a commitment from a lender to provide you with financing up to a certain amount. It is supplied by a lender prior to actually making application for a loan. The amount one is pre-approved for is determined by compiling financial information of the applicants, and with everything from debt, income, assets and credit worthiness, assessing how much a bank would be willing to loan you.
It is a critical part of the home buying process.
So Why Do You Need One Before Shopping?
Like any purchase, you don't want to find out you can't afford it after you've found the home of your dreams. A pre-approval will give you an idea of what you can afford.
It is important to note that just because you are pre-approved up to a certain amount that doesn't necessarily mean you should spend that much. A savvy lender and realtor will point that out and make sure you are shopping within a comfortable price range that makes sense for you.
Once you find the right property
After you select the perfect home comes time to write up an offer. A current pre-approval letter is a very important part of the collection of forms and documents. Often times it is the very first page of the offer to show the seller and their agent that you have visited a lender and are good for the amount offered. In this competitive market it is essential and without it your offer could easily be overlooked, no matter your ability to pay. In fact, many realtors prefer to work with buyers only after they have obtained a pre-approval letter from a lender. No matter where you begin your search for a new home, a pre-approval will certainly give you an edge.
If you have more questions or would like recommendations for lenders in our area reach out to us any time!
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