Thursday, May 9, 2024 / by Tanya Kerr
Why You Need a Mortgage Loan Pre-approval: The First Step in Buying a Home
Unlock the secrets to a smooth home-buying journey with mortgage loan preapproval. Learn how it can fast-track your path to your dream home and why it’s essential!
Why You Need a Mortgage Loan Preapproval: The First Step in Buying a Home
Hi everyone, Tanya Kerr here with my (roughly) 1-mintue breakdown about why you “NEED” to get preapproval before home shopping. Check it out, then ready my article below for the full sloppy joe.
Introduction to Preapproval
Oh, the thrill of house hunting! You spend countless late-night hours swiping through Zillow in search of that gem in the rough, and now you’ve found it! But before you rush to the open house or fall in love any farther, there’s a crucial step you might be overlooking— mortgage loan preapproval.
Here’s why you can’t skip it:
During the bustling open house that I mentioned in the video above, we had over twenty visitors which resulted in multiple offers. The following week, two buyer agents called me and asked if we would be willing to accept an offer without a preapproval. We already had multiple offers with buyers who had strong preapprovals or cash, so of course we were not going to entertain offers that didn’t have preapproval.
What is a Mortgage Loan Preapproval?
Mortgage loan preapproval is essentially a green light from a mortgage lender indicating that you're preliminarily qualified to borrow up to a certain amount of money for a home purchase, based on an initial review of your financial status. During this process, the lender will check your credit, income, assets, and debts to determine how much you can responsibly borrow.
Can preapproval affect my credit score?
It might, but usually only minimally. Often, lenders can do a soft pull that doesn't impact your credit. Read below for more Frequently Asked Questions (FAQs).
Why a Mortgage Loan Preapproval Matters
Preapproval Strengthens Your Offer
When sellers see that you are preapproved, they treat your offer with more seriousness. It's like showing up to a job interview with a letter of recommendation; it not only ensures that you are focusing your home search on properties that you can afford but it also strengthens your position as a buyer when you make an offer.
Preapproval Speeds Up the Home-Buying Process
With preapproval, you essentially have the green light from lenders, which means you can move faster than other potential buyers. In theory, no waiting around is needed—you can go straight to the closing table!
Preapproval Helps You Understand Your Budget
This is crucial. Preapproval gives you a clear picture of what you can afford, preventing that heartbreaking moment when you realize your dream home is just outside your financial reach. We see it happen a lot, and it isn’t pretty.
Preapproval Could Give You a Competitive Edge
Sellers often prefer bids from preapproved buyers as it shows financial seriousness and capability, putting you in a stronger position in competitive markets. In a scenario where multiple buyers are eyeing the same property, being preapproved can set you apart. It’s like being at the front of the line in a crowded ice cream shop on a hot Texas day!
Online Loan Calculators Don’t Always Add Up
Online mortgage calculators are great for a quick peek, but take them with a grain of salt. Why? Because, property taxes and financial conditions in Texas are a whole different ball game compared to somewhere like Tennessee! Plus, these calculators don’t consider personal factors like your credit score or unique mortgage options such as buy downs. They provide a baseline, sure, but they're not tailored to delve into the specifics of your individual financial landscape.
Think of those online calculators like WebMD for your finances—they can give you a snapshot diagnosis, but they aren't the basis for critical decisions. Just as you wouldn't prescribe yourself medication based on a quick online symptom check, you shouldn't rely solely on a generic calculator to plot your financial future when buying a home. Always consult with a professional who understands the local market and can guide you based on your specific situation.
Read this article on Choosing The Right Home Loan Lender
Getting Preapproved: It’s Easier Than You Think
Oftentimes, I find that people are nervous about getting a pre-approval, but really it's as easy as 1-2-3. Here’s the straightforward path to getting preapproved:
Preapproval Step 1:
Contact a lender—Don’t worry, if you don’t have one, I can recommend some amazing folks!
Preapproval Step 2:
Provide some basic financial information. It usually just takes a few minutes over the phone.
Preapproval Step 3:
The lender checks your credit and verifies your information. And no, it doesn’t always require a hard credit pull; a soft check might just do the trick!
Conclusion on Preapproval
So here's my advice to you: if you are someone who is serious about buying, please, please please get your pre-approval as soon as possible. It truly is much more painless than you can imagine. Make sure that you have your preapproval ready in your back pocket because a lot of times home shopping happens on the weekends and if your lender doesn't work on the weekends, you are out of luck and you might miss the home of your dreams.
Ready to start your home-buying journey with confidence? Getting preapproved is your first step towards claiming the keys to your new home. It’s simple, it’s smart, and it showcases your seriousness as a buyer. Remember, I’m here to guide you through every step of the way, from preapproval to closing. Let’s starting building your legacy, one step at a time.
Looking for more real estate insights or ready to start your home buying journey? Connect with us at T. Kerr Property Group, where your home dreams are our mission.
Call us today at: (512) 851-8350
TL;DR
Mortgage loan preapproval is your key to a smooth and speedy home-buying journey. It makes your offers stronger, clarifies your budget, and gives you a competitive edge. Get preapproved and step ahead in the race for your dream home!
FAQs
- What is mortgage loan preapproval?
- It's a lender's preliminary assessment of your ability to borrow a specific amount under current financial conditions.
- How long does it take to get preapproved?
- It can be as quick as 15 minutes, depending on your lender.
- Does preapproval guarantee a loan?
- No, it's conditional based on your continued financial health and property appraisals.
- Should I get preapproved before looking at homes?
- Absolutely! It sets realistic expectations and strengthens your position as a buyer.
- Can preapproval affect my credit score?
- It might, but usually only minimally. Often, lenders can do a soft pull that doesn't impact your credit.
- What information do I need for preapproval?
- Basic financial info like income, assets, and debts.
- How long is preapproval valid?
- Typically 60-90 days, depending on the lender.
- Does preapproval bind me to a specific lender?
- No, you can still shop around for better rates after getting preapproved.
- What if my financial situation changes after preapproval?
- You need to report changes to your lender as it may affect your loan terms.
- Can I offer more than my preapproval amount?
- It’s risky as it could lead to financing issues. Stick to your preapproved limit.