Why Get Pre-Approval for Home Financing?
With a Pre Approval From Your Lender you Strengthen Your Offering on the Purchase of a New Home
After you've found the lender you'll be using for the home buying process, it's likely that in order to present you with the mortgage choice you'll be “Pre-Qualified”. This is a step where you are asked basic financial information so the lender can get a picture of which loan products would fit you best and makes them aware of any potential issues that will need to be cleared up prior to purchasing the home.
Pre-Qualification is a step in the right direction, however you really need to be Pre-Approved to receive the benefits of knowing where you stand. In the Pre-Approval you actually apply for the loan based on the information from the Pre-Qualification as to how much home you can afford and which type of mortgage product will suit you best. When you apply for the loan, your credit report will be checked and you'll provide copies of other financial information as requested by the lender. Items commonly requested will verify your income, verify your banking account information, as well as any specific items needing attention from the credit report.
Once you are approved for the loan for which you've applied you can realize the full benefits of being Pre-Approved. It's basically telling the seller that you are a serious buyer, you're not there to waste their time with questionable financing that may or may not go through. Since you are pre-approved for a certain amount, all you have to do is find the home and then get the home appraised.
Some sellers will only deal with pre-approved buyers. You must realize that at some point you'll have to apply for the loan so you should do that before your house search begins. If there were going to be any concerns with the loan, you'll know from the start and can work to fix the issues or learn about alternative financing options. It's always better to be prepared which goes a long way to reduce stress and really strengthens your bargaining position in the home buying process.