What You Need To Know About Pre-Approval

“In a pre-approval, the lender tells you which types of loans you may be eligible to take out, how much you may be approved to borrow, and what your rate could be.”

Basically, pre-approval gives you critical information about the home buying process that will help you understand your options and what you may be able to borrow.

How does it work?

As part of the pre-approval process, a lender will look at your finances to determine what they’d be willing to loan you. From there, your lender will give you a pre-approval letter to help you understand how much money you can borrow.

That makes it easier when you set out to search for homes because you’ll know your overall numbers and it demonstrates to sellers that you’re a serious buying prospect. And with higher mortgage rates impacting affordability for many buyers today, a solid understanding of your numbers is even more important.

Pre-Approval Helps Show You’re a Serious Buyer

Another added benefit is pre-approval can help a seller feel more confident in your offer because it shows you’re serious about buying their house. A recent article from Forbes notes:

“From the seller’s perspective, a preapproval [sic] letter from a reputable local lender often can make the difference between accepting and rejecting an offer.”

This goes to show, that even though you may not face the intense bidding wars you saw if you tried to buy during the pandemic, pre-approval is still an important part of making a strong offer. In fact, Christy Bieber, Personal Finance Writer at The Motley Fool explains it may be the most important part of making an offer:

“Pre-approval maximizes the chances you’ll be able to actually close the deal – and sellers want to see that.

The fact that a pre-approval gives you a better chance of getting your offer accepted is undoubtedly the most important reason to complete this step . . .”

Bottom Line

Now that you understand what you need to know about pre-approval, it should be clear why it is such an important first step toward buying a home. It lets you know what you can borrow and shows sellers you’re serious about purchasing their home.

As you begin your search for a new home the two things to do first are connect with a local real estate professional and a trusted mortgage company like us at Troy City Mortgage where we’ve been simplifying homeownership since 2017. Doing so gives you the tools you need to purchase a home in today’s market. We stand ready to pre-approve you for a mortgage and get you moving toward buying your new home – so let’s connect today!