Pre-approval Makes Home Buying Even Easier

“You are pre-approved!” Sound familiar? Whether it is Visa, Mastercard, Discover, American Express or your favorite store in the mall, you have undoubtedly found these tempting offers in your mailbox. Most of us realize it’s just a ploy to get us to add another credit card to our arsenal and add more debt to our credit. But there is one pre-approval that you want to hear, the one from your mortgage lender.

Being pre-approved for a home loan makes the entire process even easier. It puts you in an even better light with the home’s sellers because it shows you are committed to the deal and that a bank feels that you have the means necessary to pay back the loan because they have checked your credit history.

Pre-approval is most important for people buying for the first time. You may have great credit in paying on a car, credit card or student loan, but a home is a greater debt and sellers want to know that you can undertake such a financial burden. Pre-approval is like a letter of endorsement. It is a lending company saying to the seller, “we are confident that this person can pay this amount without problems.” It shows that you can make that monthly payment and frees up the seller from having to check into your credit history.

Often times, sellers will look more favorable on people who have owned houses in the past because there is proof of their ability to pay. Your pre-approval serves as that proof when buying for the first time.

Similarly if you own your own business pre-approval is just as important. Without a dependable monthly income, sellers deem transactions with self-employed individuals as risky. Showing that a lender feels that you are financially capable of making these payments in your current employment situation will help to entice the seller into proceeding with the transaction.

Curious if you are pre-approval material. Submit your financial records to a lender you trust and you will soon know if you will finally benefit from hearing the words “You are pre-approved!”