The first thing to do before deciding on whether or not to buy a home is to set aside a budget., however, trying to set up a budget by yourself can prove to be a very taxing and difficult task. The amount of debt your holding, your down payment amount, your credit score, as well as your job history are all factors that you need to take into consideration before creating a budget for your new home. As such, it is highly recommended that you consult with a qualified lender in order to be pre-approved for a mortgage. Then and only then should you set-up a consultation with a real estate broker.
Getting pre-approved for a mortgage can be used to your advantage in a financial situation. Below are 4 reasons why you should get pre-approved for a mortgage, and how doing so can be leveraged to your benefit.
Boost Your Credibility
Getting pre-approved for a mortgage demonstrates to all the parties involved that you are not only committed to buying a home but are also capable of doing so. Most sellers don’t want to deal with uncertainty before they sell their home, and you can showcase your seriousness about the transaction by getting pre-approved for a mortgage. In fact, your offer may directly depend on getting a mortgage approved, and the lack of assurance can cause trepidation in the seller’s mind; they may worry that the deal will fall through, wasting their time and effort.
As a result, some buyers will only work with people who have been pre-approved for a mortgage so that they have some peace of mind. For instance, in the event a seller has multiple prospective buyers, the chances that you will be their choice will go up exponentially if you’ve been pre-approved, as it will significantly boost your credibility and reliability as well.
Helps Your Realtor Work More Effectively For You
Nothing defines a budget more effectively than being pre-approved for a mortgage. Your agent will now have all the tools and information needed to help you buy the home of your dreams. Having that precious intel will allow them to focus your search far more efficiently. You can prioritize according to your budgetary restrictions, and also go through your wish list by clearly identifying your needs and preferences. What’s more, your real estate agent will use the information you’ve provided to hone in on specific neighbourhoods, getting you the home of your dreams quicker than you can say, ‘pre-approved mortgage’.
Being pre-approved also means your agent can use that information to negotiate a better deal for you. The leverage that a pre-approval can provide should never be underestimated, nor should the competitive advantage that it provides prospective buyers over their non-approved counterparts. Think of a pre-approved mortgage as a bargaining chip that your agent can use to help you get the best possible price or value for your hard-earned dollar, as the seller will know that the offer on the table is solid.
Enjoy Peace of Mind
By having complete control over your finances you will avoid the ambiguity that often comes with a new home purchase. The lender should outline all of the clandestine costs that you may not have been aware of prior to purchase and should explain what you can and can’t afford so that you don’t suffer financially in the long run. A pre-approved mortgage means you don’t need to worry about accidentally overextending your finances or any fees getting overlooked in the process.
The last thing you want to do is make an offer on a home that you simply cannot afford, either now or long term. Applying for a mortgage — any type of mortgage — can be arduous and stressful. Getting pre-approved takes care of matters up front, and having your finances in check allows you to go through the transaction with both control and confidence.
Smart Business Sense
Believe it or not, getting pre-approved for a loan is a fairly easy process. You don’t need to worry about paying any fees either. You can have the peace of mind that there is no obligation on your part even in the event that you are pre-approved for the mortgage. In other words, there is no pressure or costs to worry about, so why not see if you qualify? There is literally nothing to lose other than a few moments of your time, and being pre-approved can be the difference between owning the home of your dreams and settling for mediocrity.
You can also use the opportunity to speak to a financial advisor. They will address any fears or concerns you may have, and help you make sound financial decisions right from the get-go. In fact, they will help custom tailor a solution that caters to your unique needs, your future plans, your current budget, as well as your future earning potential. With so many advantages and no real drawbacks, it just makes smart business sense to consult with a financial advisor to determine if you qualify for a pre-approved mortgage.
When Playtime is Over
Shopping online for your fantasy home can be a fun experience, but when you are actually serious about turning your dreams into a reality, then getting pre-approved for a mortgage can help create a solid foundation before you take the final step and become a homeowner.