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The Importance of Mortgage Pre-Approval

The Importance of Mortgage Pre Approval when buying a new home

The Importance of Mortgage Pre-Approval

When you’re pre-approved for a mortgage, you’ll receive a letter from a lender who commits to lending you a certain amount of money as long as you close on a house within a certain period. 

Pre-approval means you’ve already gone through the process of formally applying for a mortgage. An underwriter has examined your financial records and has determined you’re a good fit for a loan, and the bank is ready to move forward as soon as you find a suitable house.

Pre-approval is separate from pre-qualification, in which a computer program makes a quick estimate of how much of a loan you might be eligible for based on self-reported data and your current credit score. Pre-qualification isn’t reliable since an underwriter may find issues after taking a deep dive into your finances. 

Here are a few reasons to make sure you have your pre-approval letter in hand when you begin the house-hunting process. 

You’ll Shop for the Right Houses 

How much house can you afford? You may think you know, but many buyers overestimate the amount by a considerable margin. You only know for sure once you’ve taken the time to find out how much money a lender is willing to offer you.

Once you’ve been pre-approved, you can begin looking for homes that are indeed within your price range. You won’t fall in love with a house you can’t possibly purchase, and you can develop realistic expectations about the homes that are available to you. 

You may also be pleasantly surprised to learn that you can take out a larger mortgage than you may have guessed, giving you the power to view and purchase an even more comprehensive range of homes than you might have looked at before beginning the process. Precision is critical as home prices continue to rise. 

You’ll Make More Competitive Offers 

Housing inventory remains low as of this writing in 2024. Due to the high price of materials, builders are building fewer homes. Meanwhile, investors continue to crowd into the market with cash offers. 

If you want to convince a home seller to consider your offer instead of an investor’s, you need to show that you’re serious. A pre-approval letter can help you do just that, as it makes your offer nearly as much of a “sure thing” as the cash offer. 

In fact, some of the loan programs that Alex Doce offers even come with a $5,000 guarantee to the seller, but only once you’ve been pre-approved for them. 

You’ll Save Money 

When you make an offer on a home, you usually have to provide “earnest money.” The amounts can vary but are usually 1% to 5% of the purchase price. If you end up buying the home, the earnest money amount gets credited towards the purchase price.

The most common reason why a deal would fall through is financing falling through because the buyer made an offer the bank wouldn’t back.

Financing rarely falls through when you get pre-approved by a reputable and reliable lender. 

You Can Close On Your Home Faster

When you’re pre-approved for a mortgage via FCM’s Greenlight+ process, the closing moves very quickly and smoothly. You’ll have already completed much of the paperwork. The underwriter has already given you the green light. You won’t have to worry about last-minute surprises. 

If a fast closing is important to you, ask Alex Doce for additional help. He can help you get a loan that can close in as little as 10 days. 

Get Pre-Approved Today 

If you are shopping for your next home and wish to experience a smooth, easy pre-approval process, schedule a free consultation with Alex Doce. 

Alex can look at your financial situation and give you insight into which loan programs you’re most likely to qualify for, as well as what you’ll need to do to get qualified. He’ll then help you apply and get the pre-approval you’ll need to shop with confidence. Contact The Doce Group today! 

Written By:

Alex Doce

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