What Does Mortgage Pre-Approval Mean? A Major Advantage When Buying a Home

I wanted to go over exactly what is a mortgage pre-approval because a lot of people are getting themselves into trouble thinking that pre-approval is natural approval. There are so many multiple offers going on and people are trying to sweeten the deal by eliminating the subject of financing and subject to home inspections.

What the Bank Offers

When you walk into a bank – and you say I would like a mortgage pre-approval, I want to see how much I’m worth to you. The bank basically has a choice; they can either spend 20 hours on your file just to give you a pre-approval, or they can basically look over the surface and give you a general number. Now, why don’t they give you a full approval? Well, because if you really saw as many people as I do that go through mortgage pre-approvals and get locked in for 90 days, they never actually buy a home within that 90 days, it’s a huge amount of hours basically that the bank is wanting to save. They would rather spend the time going over full files on people who have live deals.

So what’s the point of a pre-approval then if it’s not really holding any weight?

Well, it’s at least giving you a starting point is what it is now when it comes to a mortgage broker or a good mortgage broker, they’re actually going to start going through the full approval process. We are willing to spend more hours than a bank is to make sure that at the end of the day we aren’t wasting a lot of time and you aren’t wasting a lot of timing being heartbroken in finding the home of your dreams. Making an offer and falling through and we’re definitely saving the bank the hours as well. See more.

Benefits of a home loan pre-approval

 

  • By going through the process of pre-approval of the mortgage loan eliminates much of the guesswork and doubts about whether you are financially capable or cannot buy a house.
  • By obtaining pre-approval of your mortgage, you can better determine the price range of the homes you can afford. There is nothing worse than falling in love with a house, only to discover that it is outside your price range. On the contrary, without prior approval of a mortgage loan, you may end up losing in a home for which you may qualify.
  • Having the prior approval of your loan represents you as a solid buyer, fully capable of satisfying all aspects of the purchase and sale contract. Sellers are more likely to accept offers from buyers who are pre-approved for their loan. This is especially beneficial when you are involved in a multiple bid situation.
  • Buyers who have pre-approved mortgage loans can generally negotiate better terms and prices than buyers who are not pre-approved.
  • Once you are under contract, pre-approval of your mortgage loan can actually help speed up the closing process, since much of your financial information is already in the lender’s system.

 

More and more today’s sellers and their listing agents require that any offer presented must be accompanied by a mortgage pre-approval letter from the buyer’s lender. Make sure you are fully prepared for your home search adventure by getting a mortgage loan pre-approval letter from your mortgage lender before you buy. For more details, visit: http://www.mortgagebroker247.com.au/personalloans/