Written by: Michael Silverberg - Real Estate Agent - PSR Brokerage, Ltd.
What is a Mortgage Pre-Approval?
A mortgage pre-approval is a commitment from an institution (lender) that sets forth the parameters for which they'll lend you money, such as the rate. It is basically the lender saying, "we would lend you money for a mortgage based on what you have told us about your situation and criteria".The most important criteria these institutions look at are:earnings, credit rating, and down payment size.
Why It's Important for Your Realtor
If you are not pre-approved and trying to buy real estate in today's hectic market you are doing a disservice to yourself. Be prepared when making the largest purchase of your life. This is not a time to procrastinate. Your realtor will appreciate that you have taken the steps necessary to know that they can purchase a property.
Why Pre-Approval Is Essential
It narrows down the options for purchase because the borrower can evaluate the size of their down payment and the size of a mortgage that they are able to borrow.
If a buyer is not pre-approved, they risk purchasing a property and not getting approved for a mortgage if it is beyond their means. Pre-approved helps to know exactly what the banks, lenders or credit unions are willing to lend you.Give purchasers realistic expectations of what they can buy.
Realistic expectations make the purchasing process much smoother and less time consuming by streamlining the needs. This eliminates the need to visit homes that are unrealistic to the buyer.
Most importantly when it comes time to close on a property that's been purchased a pre-approval eliminates stress and lowers the amount of defaults from a lack of financing.
How to get Pre-Approved
Getting pre-approved is easier than ever with Homewise. Start your application today here.
FAQs
What is a mortgage pre-approval?
A mortgage pre-approval is a commitment from a lender that outlines the terms they are willing to offer for your mortgage. This includes the loan amount, interest rate, and other terms based on your financial situation, including income, credit score, and down payment size.
Why do I need a pre-approval before home shopping?
A pre-approval helps you understand how much you can borrow, giving you a clear budget for your home search. It prevents wasting time looking at properties that are out of your financial reach and makes the home-buying process smoother.
How does mortgage pre-approval benefit my realtor?
Realtors appreciate clients who are pre-approved because it ensures that you are a serious buyer with clear financing. This saves time and helps narrow down the list of properties to those within your price range.
What happens if I buy a house without a pre-approval?
If you buy a house without being pre-approved, you risk finding out that you don't qualify for the mortgage after making an offer, which can lead to stress and possible contract cancellations.
How can I get pre-approved for a mortgage?
Getting pre-approved is simple with Homewise. You can start your application online today to receive your pre-approval and begin the home-buying process with confidence.
