Determine How Much Home You Can Afford
Pre-approval helps you determine the upper limit of what you can afford. Getting pre-approved first, help avoid being disappointed if you don’t qualify for as much as you had hoped.
Shows What Your Total Investment Will Be
You’ll know approximately how much money you’ll need for down payment and closing costs.
Lets You Know What Your Monthly Payment Will Be
You’ll have a close estimate of what your monthly principal, interest, taxes and insurance (PITI) will be.
Identify the Loan Program That Best Fits Your Needs
With different loan programs available, it is important to know which types you qualify for and which will best suit your needs.
Strengthens Your Offer
Sellers will not take your offer seriously until you have been prequalified for a loan. Becoming pre-approved makes you an even stronger Buyer in their eyes, thus increasing you negotiating strength.
At this point, your lender can also help you determine alternatives and strategies that could help you buy the home of your dreams. Some examples include:
Debt Consolidation Counseling
Adjustable vs. Fixed Rate Loans
15- years vs. 30- year Financing
Reverse Mortgage Financing
In order to be pre-approved, the lender will need to know the following:
Your Employment History and Income
Your Monthly Debts and Obligations
The Amount and Source of Cash Available for Down Payment and Closing Costs
When you are pre-approved you’ll receive a Pre-Approval letter to give to your real estate agent. The seller may be more likely to accept your contract because they know you are qualified to buy their home.