Getting pre-approved for a home mortgage puts you in the driver’s seat when it comes to negotiating the price of a home. It also minimizes the risk of being denied a home loan after you find your dream home. Overall, it will save you a lot of headaches down the road.
That’s why real estate agents will encourage you to get pre-approved when you’re serious about home buying. Here are some of the many benefits of home shopping with pre-approval.
Better negotiating position
Being pre-approved shows the home seller that you’re serious. It also shows them you’re the real deal because you’re already working with a lender who is willing to finance your purchase. This puts you in the very attractive position of strength when it comes time to negotiate. In some cases, you could use your pre-approval status to justify offering a lower number than the list price.
Likewise, in the case of multiple offers, sellers tend to favor the one that is pre-approved because you’ve taken the time and effort to show you can follow through with your offer.
A lender’s full pre-approval will allow you to search for homes in the amount you can borrow. You won’t waste time or emotion considering homes out of your price range, only to find out later they aren’t a possibility.
Better informed decision making
For first-time home buyers who may not be aware of the extra costs that come with buying a home, an itemized list provided after being pre-approved will provide a necessary heads-up. These items may include:
- Title insurance
- Lender closing costs
- Homeowner’s insurance
- Escrow fees
In addition, you may need to factor in the pesky extra costs of renovation, painting, carpet cleaning, outdoor landscaping, etc.
Keeping all of the above in mind, you’ll be better informed when it comes to the price you offer and how you negotiate.
The last thing you want is to find the home of your dreams and not be able to jump on it because of the time involved for the bank to determine your ability to borrow and agree to finance your home purchase.
Lenders need to run a credit check and confirm your income, for example. But if you dot all your i’s and cross all your t’s ahead of time, you will be way ahead of the game.
Looking for a lender to work with on the purchase of your new home? Call Golden Oak Lending today!