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Should You Get Pre-Approved For a Home Loan?

August 02,2023 | Posted By Jeff and Cheryl Fox in Real Estate
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There are three stages when shopping for a mortgage loan, Pre-Qualififacation, Pre-Apporval and, Approval.

I won't bother discussing pre-qualification. Because, as any real estate agent will tell you, getting pre-qualified means nothing in real estate. It's a matter of a phone call. You may already get unsolicited letters informing you that you are pre-qualified for a loan or credit card.

Pre-approved for a home loan is a little better and means that a lender may have reviewed your financial information and has given you an estimate of how much money they are willing to lend you and what purchase price you can afford. This is not a guarantee that you will be approved for a loan, but it gives you a good idea of what purchase price you can afford. You will also get a Pre-Approval Letter.

Being approved for a home loan is a whole new ballgame. It means that the lender has reviewed your financial information and that you have gone through the underwriting process. This means you are further along in the loan process and essentially guaranteed to get the loan. You can close the transaction quicker than someone just starting the loan process.
There are several reasons why getting approved for a home loan is better than being pre-approved:

 It gives you more negotiating power with sellers. When sellers know you are approved for a loan, they are more likely to accept your offer at a lower price. This is because they know you can obtain financing and are serious buyers.

 It can help you win bidding wars. In a competitive market with multiple offers on a home, being approved for a loan can give you an edge. This is because sellers are more likely to choose an offer from a buyer approved for a loan, as they know the buyer will be able to close the deal.

 It can save you time. If approved for a loan, you will not have to go through the underwriting process again when you make an offer on a home. This can save you time, as the underwriting process can take several weeks.

 Knowing that you have been approved for the loan can give you peace of mind, as you will know that you can afford the home you want.

 If you are serious about buying a home, I recommend getting approved for a loan. It is a great way to show sellers you are serious and gives you an advantage in home-buying.



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