It doesn’t matter if you are relocating to Raleigh, Cary or Wake Forest and have bought many homes in the past, or if you are a local and are buying your first home. Getting the house you want, on your terms, takes careful planning and a time tested and proven strategy.
Pre-approval for your mortgage is a critical component of the winning strategy of all successful home buyers. Let’s take a look at 3 reasons you will want to be approved for your loan before you begin looking at homes.
You Will Get A Better Price
Home sellers are afraid that potential buyers will not be able to close because of financing. This has always been the case, and with recent changes in the qualifying rules for almost every loan product, sellers are more cautious than ever.
Presenting a well designed pre-approval package with your offer takes this concern off the table and allows your agent to negotiate from a position of financial strength. Your chances to get the seller to lower the price of the house increases greatly.
You Know Exactly How Much Any Given Home Will Cost
With mortgage pre-approval behind you, you will be armed with everything you need to know to find the most home you can comfortably afford. You will know what interest rate you qualify for, how much down payment and closing costs will be required, what the monthly payments will be, and what tax advantages you will enjoy as a result of your purchase.
Without the anxiety that comes from not knowing what your short term and long term financial exposure is, you will be able to relax and look at the best home for your given situation. Buying a home can be fun if you know and are comfortable with all the costs involved.
You Will Close On Time
Significant delays in closing, caused by the buyer, can result in financial penalties. In a worst case scenario, you could pay a delay penalty, the seller could terminate the contract and you would lose the house, and you could lose your earnest money.
Real estate contracts are binding and there are consequences to be paid for missing dates, especially the closing date. Mortgage pre-approval can prevent this from happening.
Know the difference between a real mortgage pre-approval and one that isn’t worth the paper it’s written on.
Real pre-approval may require you to submit documentation to the loan officer. Don’t be afraid of this. It is in your best interest.
The loan officer will pull a credit report, verify income and assets, and present you with a package that contains a pre-approval letter, terms and conditions of the loan product you are approved for, and a list of contingencies that must be met for final approval.
All of these things, when integrated into a well designed negotiation strategy, will go a long ways towards getting your offer accepted. On your terms. And it will also help to reduce your anxiety and make the home buying process fun. Just like it should be.
