Explore the Mortgage101 Library
Check Local Mortgage Rates
Loan Program Choices
Use our calculator to find out your estimated monthly payment in advance: Enter the loan amount, interest rate, and length of mortgage.
Try our Mortgage Payment Calculator
Getting a mortgage preapproval can provide you with several benefits as a home buyer. Here are some of the advantages of getting a mortgage preapproval.
A mortgage preapproval is something that you can get from a mortgage lender that says you are approved for a mortgage before you have selected a specific property. With this process, you are going to fill out a loan application and provide the lender with income documentation. The lender is going to pull your credit report and evaluate your situation for credit worthiness. They are going to do everything that they would normally do with a traditional mortgage application. They will then notify you that you are pre-approved for a mortgage, and they will tell you the amount of money that you can borrow.
Know Your Budget
One of the big advantages of going through this process is that you are going to know your budget. Mortgage preapproval is going to tell you exactly how much money you can borrow. This way, you will know how much your mortgage payment is going to be ahead of time. Many people spend time looking at properties that they could never get approved for. If you get pre-approved, you are not going to have to worry about this problem.
Increase Negotiating Power
Another advantage that mortgage preapproval is going to give you is that it will increase your negotiating power. When you start looking at properties, real estate agents and sellers are going to give you special treatment. If you make an offer on a property, it is automatically going to jump to the head of the pack of offers. When buyers are not pre-approved, this represents a level of uncertainty for the seller. A seller will be inclined to take your offer even if other offers are slightly higher in price. A seller knows that your offer is essentially a sure thing. This means that he can agree to your offer and get a guaranteed amount of money instead of taking another offer that he is not sure of. If he chooses a buyer that is not preapproved, that buyer may not be able to qualify for a loan in the amount that is needed. At that point, the sale could fall through, and the seller would be right back where he started. Being pre-approved is automatically going to give your offers a lot more weight when it comes to negotiating with sellers. Therefore, your odds of getting the house that you want are going to improve.
- How to Get Approved for an FHA Loan despite Bad Credit
- Appraisal Basics
- Low Down Payment Loan Qualification
- 3 Reasons Banks Reject Short Sales
- FHA Eligibility with Bankruptcy and Foreclosure
- 3 Warning Signs of Loan Modification Scams
- What To Do When Mortgages Default
- Second Mortgages: Advantages and Disadvantages
- FHA Loans for a First-Time Home Buyer