Once you have decided to buy a home for your family, you really don’t want to be held back by your inability to arrange the funds, do you? It has happened with many individuals in the past when they finalized a home but their mortgage application was not approved by their bank. This is why it makes sense to start your search for a dream home only after securing a mortgage pre-approval letter from a bank.
Having pre-approval letter is like having a check in your hands
Pre-approval letter is a document issued by the bank in the favor of an individual that says that the bank is ready to give a mortgage loan to him. This document even specifies the amount of money that the bank is willing to provide as loan for buying a home. Having a pre-approval letter from the bank is like having a proof of funds available to you. It also gives you confidence to go ahead and search homes for your family.
Pre-approval letter is much better than pre-qualification letter
You should not confuse pre-qualification letter with pre-approval. Pre-qualification is tentative approval not backed by analysis and verification of financial documents of the applicant. On the other hand, mortgage pre-approval is a very reliable and authentic document that is issued by a bank only after thorough analysis of credit report and other financial statements of the applicant.
Advantages of securing a pre-approval letter
• You know how much money you can get from the bank as loan for buying a home
• You get more leverage than other buyers from homeowners as you are seen as a serious buyer with money
• You can negotiate for a lower price with homeowners which they agree because they see money in your hands
• Real estate agents consider pre-approval letter proof that the buyer is serious and they work hard for these buyers
It has been shown that there is higher acceptance for buyers having pre-approval letter among not just homeowners but also the realtors. It may be psychological but the fact is that realtors give better results when they see pre-approval letter in the hands of their clients. If you feel that your realtor is less interested and not giving his 100% in your case, the culprit might be the absence of this pre-approval letter from the bank. Finally, you feel relieved with this all important document in your hand and carry out your search with no stress on your mind.