Budget Savvy Reasons to Be Pre-Approved Before Buying Property
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The stress of purchasing a home, whether it’s your first property or your next step up the ladder, can be overwhelming.
It’s also a process that’s fraught with points at which you could end up wasting money, often without even realizing it.
Being pre-approved for a mortgage prior to going any further is a good idea regardless of your circumstances, particularly if you want to keep your budget in check and avoid extra hassle.
Let’s look at why this is, and what benefits it brings.
No More Surprises: Why Pre-Approval Gives You the Edge in Real Estate Negotiations
It’s a fact: having pre-approval for your home purchase helps you secure the best possible deal. Being pre-approved lets sellers know that you’re serious about buying, and that you have the financial strength to back it up. That means they’ll be more likely to negotiate with you – or even lower their asking price!
Plus, being pre-approved gives you an edge over other buyers who don’t have this advantage. With real estate markets so competitive these days, having a leg up can make all the difference between getting your dream home and losing out.
Also, knowing exactly what kind of loan amount and interest rate is available to you before making an offer helps avoid any unpleasant surprises down the line – like not qualifying for financing after signing a contract on a property. So if budget savvy reasons are what motivates your real estate search, seeking pre-approval before you do anything else should be a priority.
Steer Clear of Overpriced Properties: Secure Your Dream Home Before it’s Too Late
The best way to ensure you don’t overspend on a property is to be pre-approved for a loan before you even start looking. That way, when you find the perfect home, you know the maximum amount that can be borrowed and won’t be tempted by properties above your budget when submitting a mortgage application.
Furthermore, with pre-approval comes peace of mind knowing that when the time comes, financing will fall into place without any major hiccups along the way.
So if securing your dream home at the right price is what motivates your real estate search, being pre-approved should definitely be on your to-do list.
The Cost of Not Being Ready: How Last Minute Financing Could Cost You Big Time
On the other side of the coin, going into a real estate transaction without pre-approval can be risky business. Without knowing exactly what kind of loan amount and interest rate you’re approved for, it’s impossible to accurately gauge how much your monthly payments will be or how long it will take to pay off the mortgage.
In addition, when lenders are presented with last minute financing requests – especially from those who have yet to provide proof of income or credit score – they may not be as willing to grant approval at a competitive rate.
And because time is often limited in such cases, buyers may end up settling for less favorable terms just so that the purchase can go through on time.
The Bottom Line
It’s useful to reframe the way you think about applying for a mortgage and hunting for your dream home; don’t just consider steps like securing pre-approval as a good way to save money, but rather as a means of avoiding overspending on getting your foot in the door.
Given how many other costs you’ll have to factor into your house moving budget, from fees for brokers, agents and lawyers to expenses associated with the actual move itself, the more you look after the pennies early on, the better.
