If you’re looking to buy a home now or in the near future, getting pre-approved for a mortgage will provide you a lot of key information, tools and insights to get you a headstart in your home buying experience. While it isn’t a mandatory step, getting pre-approved offers a range of advantages that will simplify your home search and set realistic expectations. Here are five reasons why mortgage pre-approval is beneficial for prospective buyers:
1) It helps you understand what you can afford
If you’re in the market to buy a home, understanding what you can afford is key. Getting pre-approved for a mortgage establishes what you’re eligible to borrow right from the start, based on your financial background and other key factors. It also provides insight on your home price affordability, which can then help you properly budget during your home search.
2) It simplifies your home search
Searching for a home can be very time consuming and can often feel like a full-time job. Getting pre-approved and knowing what you can afford will save you time and improve the overall home buying experience. You can set realistic price points within your means, and save yourself the headache of aimless searching and disappointment.
3) Budgeting is easier
Once you know how much you qualify for, you can then plan your monthly payments. Based on your intended down payment, you will have a better understanding of how to budget for the future and account for any other household needs and expenses, including closing costs. A common mistake among many buyers is that they don’t factor closing costs into their overall home price affordability. Getting pre-approved encourages you to consider all unforeseen costs so you can plan better. View our list of expected closing costs here.
4) It gives more credibility to buyers
A pre-approved mortgage can serve as a helping hand and a boost of confidence during a transaction. It shows your financial stability and reinforces that you’re a credible buyer with real interest in making a deal. It can also give you added negotiating power on a purchase and a leg up in the instance of a bidding war where multiple offers are made on the same property.
5) Protect yourself from interest rate increases
Pre-approval also saves you from unpredictable increases in interest rates. With markets that are constantly changing, this is definitely a key consideration. A pre-approved mortgage guarantees you an interest rate for a period of 90 to 120 days, which allows you to make a purchase without rushing or delaying the transaction.
How to get pre-approved
At Homewise, we’ve made this process as simple as possible, working with over 30 banks and lenders to find you the best mortgage. Apply online today in just minutes here and a Homewise Mortgage Advisor will get in touch and personally assist you every step of the way.