The many advantages of being pre-approved
- Getting pre-approved for a mortgage helps you set a budget and also shows sellers that you’re serious about purchasing a home
- However, getting pre-approved too many times can have a negative effect on your credit score, so avoid shopping around for a mortgage until you’re ready to buy
What does getting pre-approved mean?
Being pre-approved for a mortgage means that a lender has reviewed your credit history and will likely approve you for a home loan. This pre-approval will tell you how much the bank is willing to lend you, as well as how much time you have to accept their offer. Getting pre-approved for a mortgage will help you big time in the home search and negotiation process.
There are multiple advantages to being pre-approved for a loan including:
1) Identifies a realistic home cost
Being pre-approved will allow you to know exactly how much you can borrow. This will save you time by identifying which homes you can afford and which are outside of your budget.
2) Improves your image as a buyer
Being pre-approved shows the seller that you're a serious buyer and not simply a person looking around. It also tells the seller that you're capable of affording the home and that your offer probably won’t fall through due to lack of funding.
3) Saves you time
Applying and getting approved for a mortgage takes time. If you get it out of the way before making an offer, it'll speed up the purchasing process allowing you to seal the deal before another competing buyer has time to throw their hat into the ring.
4) Enhances your negotiating power
Pre-approved buyers have an advantage over buyers that are not pre-approved. The seller is more likely to accept your offer, even if another offer is slightly higher in price. That’s because being pre-approved shows financial certainty. You can still negotiate for better terms or better pricing.
Home Savi makes pre-approval easy
We've partnered with Better Mortgage to make getting pre-approved as easy as pie (think spend-a-few-minutes-and-get-approved-in-24-hours easy). You’re all about the modern home buying experience. Shouldn't your mortgage provider be modern too? Better combines best-in-class technology with a dedicated support staff to bring you unparalleled control and transparency to the home buying process.
A word of caution
Getting pre-approved by a lender usually requires a "hard pull" on your credit. Too many of these can end up hurting your credit score. To prevent this, follow these tips:
- Shop lenders within a 14-45 day time frame
- Be aware that credit reports are good for 120 days
Once you’ve been pre-approved, you’re ready to start searching for your new home. When you find one you like, the next step is determining an appropriate offer price.