If you are house hunting, or plan to start, you’ve probably received loads of advice on everything from finding the perfect location to working with the best real estate agent and everything in between. But what about a mortgage pre-approval before you shop? Getting pre-approved means a mortgage lender has reviewed your financial, credit, and work history, as well as other requirements, and has determined that you are qualified for a home loan, up to a certain amount. Getting pre-qualified for a mortgage from a reputable lender should be your first step in this hectic housing market, for several reasons.
1. Gives You a Budget Before You Start Shopping
Buying a home is a balancing act between your must-haves, your nice-to-haves, and your budget. And ultimately, cost is the deciding factor. When you get a mortgage pre-approval, you’ll know what you can afford before you start looking. Having a budget and sticking to it will help eliminate the time and effort looking at homes that you won’t be able to finance.
2. Helps You Stand Out from Other Buyers
In today’s competitive market, where demand is high and inventory is low, being pre-qualified is key. Real estate agents and sellers prefer to work with home buyers who are prequalified as this makes the contract process much smoother and more likely to close. Some agents may not even agree to show buyers houses until they have a pre-approval.
3. Gives You More Negotiating Power
If you are pre-approved, it lets the seller know you are a serious buyer, with a strong potential for a sale. This might give you more flexibility to negotiate repairs or improvements or other contract terms; especially if the seller is looking to close as soon as possible.
4. Gets You the Keys Faster
The average time to close a home purchase is around 51 days. With the amount of due diligence the lender has to do on both the property and the buyer, much of the delay is wrapped up with the mortgage approval. Being pre-qualified can help speed up the process and get you in your new home sooner because your financial information has already been collected.
Getting pre-approved isn’t as painful a process as a buyer might think. You’ll need to compile personal, income, and asset information for your lender:
- Social Security number to run a credit check
- W-2s and/or alternate tax information
- Pay stubs
- Information about additional income, if any
- Checking, savings, and investment account information
- Information about any large monetary gifts
Ready to start your DFW home buying journey with a mortgage pre-approval? First United Mortgage can get you pre-qualified today, so you can start house shopping tomorrow! Give us a call at (972) 591-3097.