Many experts advise prospective home buyers to get preapproved for mortgage. Why is this so? What exactly are the advantages of being preapproved?
Know Exactly What You Can Afford
To prepare a preapproval statement, a mortgage lender will review your financial situation and credit report. Based on this, the lender determines how much he can lend you. With this, you can determine exactly how much you can afford, thereby streamlining your search. You don’t have to waste time checking homes that are too low or too high for your purchasing ability.
Preapproval Saves Time
As mentioned above, preapproval saves time by narrowing the choice of houses to those you can afford, but it doesn’t stop with that. In processing preapproval, the lender does work in advance, such as checking credit and income information – all of which will be done, anyway, when purchasing a home. Once a buyer finds a viable home, these will all be done and the purchase can proceed faster.
Gaining Valuable Information
Sometimes, buyers fail to factor additional costs and end up with financial management problems. With a preapproval, a complete list of costs are included so you can prepare and decide accordingly.
Better Negotiation Position
Being preapproved shows you’re serious about a home purchase and demonstrates your purchasing ability. Thus, you’re in a better negotiation position with sellers and agents.