With guidelines becoming stricter in the past few years, most mortgage professionals and realtors recommend getting pre-approved for a loan before looking for homes. A pre-approval will not only give you a guideline for how much you’ll be approved for but also gives you an early look at any obstacles that could arise. Let’s take a look at the advantages of being pre-approved.
Allows You to Set Real Expectations on What You Can Afford
A pre-approval will give you an idea of the amount you could borrow. It is recommended not to borrow the maximum. Use the pre-approval to set a budget you’re comfortable with, how much you’ll need to close and what your maximum monthly payment will be.
Makes You More Desirable to Sellers
When you are pre-approved, a seller is more likely to consider your offer as a sure thing. While you can still be denied after a pre-approval, this shows sellers that you have looked at your current financial situation and have begun interacting with lenders. A pre-approved buyer will have a leg up on those who have not been through the process at all.
Alerts You to Potential Problems
Whether it’s improving your debt-to-income ratio, correcting errors on your credit report or saving for a larger down payment, most people have some work to do before they commit to buying a home. A pre-approval allows you to see these issues ahead of time and improve them before it throws a wrench in your home buying process.