Buyer Tips

Why You Need to Be Pre-approved for a Mortgage

July 13, 2019

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In today’s real estate market shopping idly for a home may be fun, but if you area a serious home buyer you need to start the process in a lender’s office, not after you find the home you love. As a potential buyer you benefit in several ways by consulting with a lender and obtaining a pre-approval letter.

First point is that you have an opportunity to discuss loan options and budgeting with the lender. The last thing you want to do is to take out more of a mortgage then you really can afford comfortably. Second, the lender will check your credit and alert you to any problems and give you time to fix if needed. Third, you will learn the maximum amount you can borrow, which will give you an idea of your price range. Its no fun to go out and find the house of your dreams then find out you really can’t afford it. However, you should be careful to estimate your comfort level with a given house payment rather than immediately aiming for the top of your spending limit. Lastly, most home sellers expect buyers to have a pre-approval letter and will be more willing to negotiate with you if you have proof that you can obtain financing. As a listing agent I will recommend a pre-approved buyer versus a buyer that just has a prequalification letter.

Pre-qualification vs. Pre-approval

A mortgage pre-qualification can be useful as an estimate of how much you can afford to spend on your home, but a pre-approval is much more valuable because it means the lender has checked your credit and verified your documentation to approve a specific loan amount (usually for a particular period, such as 90 days). Final loan approval occurs when you have an appraisal done and the loan is applied to a property.

First Time Home Buyer How do I buy a home How much of a downpayment is needed? Mortgage Why should I get Preapproved first

tomo92596

A resident of the Temecula area since 2003, Tom has been an active real estate agent since 2004. He has consistently been ranked in the top 5% of sales production in the Temecula market, and has produced over $80 million in career volume. He and his wife Maria have raised three children in the Temecula area with all three graduating from Chaparral High School.

When not listing real estate, selling real estate, or writing about real estate, Tom is trying to keep up with his grandson on their bikes, playing sports, learning Guitar, or trying to knock the rust off of his tennis game. Over the years he has coached hundreds of youth soccer, basketball, baseball teams. He was most recently coaching his grandsons pony baseball team.

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