Getting pre-approved for a mortgage is one of the first and most important steps in the home buying process. If you’ve been thinking about purchasing a new Edmonton home, here are six key reasons why you NEED a pre-approval before you begin your new home buying journey.
1. It’s Better Than a Pre-Qualification
While a mortgage pre-qualification is undoubtedly beneficial, it doesn’t carry the same clout as a mortgage pre-approval. Simply put, a pre-approval is a lender's commitment to loan you a certain amount for a mortgage based on your current financial situation.
However, during the pre-qualification process, a lender only takes a high-level view of your finances and provides a guestimate as to what they think they could lend you for a mortgage. From here, you can decide if you’re ready to move on to the official pre-approval process or if you need to work on your finances before taking the next step.
2. Zero-In On What You Can Afford
Mortgage pre-approvals are also a huge time saver because they allow you to focus only on the properties you can afford. Once you have this commitment from the lender, you can narrow your search to homes within your price range and avoid wasting time looking at homes that exceed your pre-approval limit.
Helpful Hint: If possible, consider purchasing a home that meets your needs (and hopefully, many of your wants) without spending your entire approval amount. Not only will this keep you from becoming “house poor” but you’ll pad your savings and/or have enough left over for potential future upgrades.
3. Sellers Will Take You (More) Seriously
Mortgage pre-approvals are especially important if you want to be taken seriously by home sellers. Not only does a pre-approval indicate that you’re committed to purchasing the property, but it also reassures sellers that there will be no problems when it comes to securing financing and moving ahead with the transaction.
Here too, in a multiple offer situation, your offer will be more readily considered vs. a buyer without a pre-approval (even if it’s a higher offer than yours).
4. Your REALTOR® Will Have Better Negotiating Power
In addition to being taken more seriously by the seller, your mortgage pre-approval will give your Edmonton REALTOR® greater negotiation power. Because you’ve already secured your financing, the seller may be more willing to make some compromises (i.e., on the closing date, necessary repairs, closing costs, etc.) because the sale is a safe bet.
See our previous post: 6 Great Reasons to Choose a REALTOR®
5. Expedite Your New Home Purchase
According to experts, it takes an average of 50 days to close on a home. While several factors can cause delays in the closing process, one of the biggest culprits is financing. A mortgage pre-approval won’t just help streamline the closing process, but it also guarantees you’ll be able to enjoy your new home all that much sooner.
6. Peace of Mind
Last but not least, a mortgage pre-approval will give you some much-deserved peace of mind. The lender's financial commitment, combined with a locked-in interest rate, will help you move confidently ahead with your new home purchase. You also won’t have to worry about falling for the home of your dreams only to find a) you can’t afford it or b) the home seller isn’t interested because you lack secure financing.
Are you thinking about buying a home in Edmonton? Download your very own free copy of my Ultimate Edmonton Home Buyer’s Guide. From tips on saving your down payment and determining your wants and needs to securing financing and making an offer on your new dream home, I’ll walk you through the home buying process step by step.
Photo credits: freepik.com
Posted by Kevin Klein on
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