HOW LOAN PRE-APPROVALS GIVE BUYERS THE ADVANTAGE
Mortgage pre-approvals give buyers the advantage when negotiating with sellers. The housing market is more competitive than ever, and bidding wars are a new hurdle in many transactions. Plus, mortgage guidelines have tightened. Lenders are increasing documentation requirements and following these more closely. A pre-approval gets you through much of the loan process, and uncovers potential pitfalls before becoming bound by a contract to purchase.
PREAPPROVALS HELP BORROWERS UNDERSTAND THE BEST OPTIONS FOR THEIR FINANCIAL SITUATION INCLUDING:
- The price range that is best for you
- How much cash you need to close
- Your maximum monthly payment
If borrowers understand their limits, it helps to negotiate with confidence. Since sellers like a sure thing, you’ll have an advantage over buyers who may not have been through the process.
HOW LONG IS THE PRE-APPROVAL VALID?
Pre-approvals are typically good for the “shelf life” of the documents used. These include credit reports, pay stubs, bank statements, W-2s, tax returns, and more based on the specific situation. The usable life of these documents will vary, yet it’s usually safe to say that the approval is good for up to three or four months. During this time, keep all important financial documents and have them readily available for future updates.
WHAT IF I CHANGE MY MIND?
That’s perfectly fine!
There’s no obligation to purchase a home or use a certain loan program after the pre-approval phase. Pre-approvals help to ensure that borrowers know what’s involved, are comfortable with a price range and are ready to make a move.
When you have financing in place before making an offer, the process of purchasing a home is easier for borrowers.
We’re here to help guide you through the entire loan process. Contact us to learn your mortgage best options.