If you’ve ever considered buying or have bought a house, you’ve probably been advised to get pre-approved for a mortgage. And that is good advice for many reasons. Pre-approval is a statement, usually in the form of a pre-approval letter, from your lender specifying that you are indeed qualified to borrow up to a certain amount – which gives you several advantages as a buyer. Let’s take a look, then, at the top 5 reasons why you need to be pre-approved before buying a house in Norman.
1. Helps You Get Your Finances in Order
One of the early advantages of getting pre-approved before buying a house in Norman is that it can help you get your finances in order.
First, you should be aware that pre-approval is not the same as pre-qualification. Pre-qualification is based only on information you provide to the lender along with a soft credit. It is useful, but allows you to know only how much you may qualify to borrow.
Pre-approval, on the other hand, happens only after your lender performs a thorough review of your financial records and a hard credit pull. And this means that it is almost equal to actual mortgage approval. It gives both you and a seller a fairly accurate assessment of your home buying power.
The good thing about the pre-approval process is that it will make you take a hard and honest look at your finances. And this means that going through the process can help you (maybe even force you) to get your finances in order – a prerequisite for making a huge purchase like buying a house.
2. Lets You Know What You Can Afford
Not only will getting pre-approved before buying a house in Norman allow you to know exactly how much you can borrow and, as a result, exactly what you can afford. It will also let you know how much your loan will cost.
“When you get pre-approved, your lender typically tells you what loan interest rate you can qualify for. Depending on your circumstances, you may actually be able to lock in that rate so you’ll know exactly what you’ll pay for your home loan. If you know up front how expensive your mortgage loan is going to be, then there will be no surprises when it comes time to actually purchase your home. You can make absolutely sure that the amount you’re planning to borrow will fit into your budget. And you can assess whether the total costs you’ll pay for your home over time are worth it.”
3. Makes You an Attractive Buyer
If you’ve been pre-approved before buying a house or making an offer, you will be a more attractive buyer. Sellers will, that is, perceive you as a serious buyer, and that can make your offer more attractive. This is an important consideration in today’s market where inventory is low and demand and buyer competition are keen.
“[I]f you’re looking to buy in a seller’s market, then one of the advantages that you’re definitely going to want is a mortgage pre-approval. Consider this: if there are two buyers making an asking price offer on a home and only one has a mortgage pre-approval, who do you think the seller is going to be more likely to go with? In almost all cases it’s going to be the buyer with a pre-approval since there’s a lot less risk to the seller of the deal falling through due to lack of appropriate financing.”
To discover more about the difference pre-approval can make in your market, contact a Norman agent. Just call 405-625-2823 to discover more.
4. Gives You Negotiating Leverage
When you get pre-approved for a mortgage, it gives you more negotiating power and flexibility in terms of negotiations. In addition to helping you appear as a more attractive (and therefore likelier) buyer, this helps strengthen your position when it comes time to talk price and other details with the seller. This can help secure better rates or help get repairs or improvements thrown in.
Getting pre-approved for a mortgage is one of the first steps toward buying your dream home, but that being said, it’s important to note that there are also some benefits beyond simply appearing like a more appealing buyer. For example, getting pre-approved may allow you to negotiate for better rates or even for repairs or improvements to be made by the current owner, which can help improve your negotiating position. In other words, pre-approval can help ensure that you get the best deal possible when buying a home.
5. Helps You Close Faster
And getting pre-approved before buying a house can also help you close faster. The main reason for this is that you don’t have to wait as long for mortgage approval. “With a mortgage pre-approval, financing is already secured and you can jump right to the next steps, such as your appraisal and inspection.”
“On average, it takes about 50 days to close on a house. The delay is due to quite a few different things, and that includes mortgage approvals. If you’ve already got your pre-approval in hand, you’ll be able to speed up the process so you can move into your new home earlier than you might have been able to otherwise.”
Buying a House with a Norman Agent
As you can see then, there are good reasons for and advantages to getting pre-approved before buying a house. But you still have to find the right house and come out the winner in the negotiations. An experienced Norman can be the partner you need to help you navigate the process. So when buying a house is on your horizon, be sure to contact us today at 405-625-2823.