When you are shopping for a home, one of the first steps in the process is to get pre-approved for a mortgage. Not sure what pre-approval is or why it is important? Let’s go over the benefits. But first, we will explain the definition of mortgage pre-approval.
What is Mortgage Pre-Approval?
Mortgage pre-approval is a letter we provide you early on in the loan process. You give us permission to check your credit, after which we are able to estimate the maximum loan amount for which you are likely to receive approval.
The statement we print for you helps you understand what you can afford, and tells sellers the same thing.
It goes a step further than mortgage pre-qualification, which generates a similar estimate, but only based on the info you provide.
Since we actually check your credit for pre-approval, it is more meaningful than pre-qualification.
- You will know your budget. Pre-approval tells you how much home you can afford. Finding this out is one of the first steps in shopping for a home that fits within your budget. It also can help give you an idea of what your financial future could look like based on the amount you might potentially borrow.
- You will have an idea what your interest rate will be. Along with the maximum amount you could be approved to borrow, you will also find out your potential interest rate when you get pre-approved. This information can also help you with budgeting considerations as you continue forward in the home buying process.
- You will be able to narrow down your search. Before pre-approval, you might be just guessing which houses you could potentially afford and which you could not. After pre-approval, you will not waste time browsing listings or going on tours for homes that you are simply never going to be able to purchase. In some cases, this can even prevent heartbreak. It is not uncommon for borrowers to really get attached to houses they later find out they cannot afford. This way, you do not risk that happening to you. When you get attached to a home, it will be one you can realistically make an offer on.
- You will bring bargaining power to the negotiating table. One of the main benefits of mortgage pre-approval is that you have the letter to share with sellers. There is a big difference between telling a seller, “Really—I can afford this. Take my word for it,” and show them the proof in the form of the letter. This is about a scenario where you and a competing buyer both are making offers, and you have a letter and they have only their word. Who do you think the seller is going to take most seriously? Almost certainly you.
- It will be faster and easier to close. Mortgage pre-approval gets the loan process started on the right track. As a result, it tends to go smoothly, helping you close fast when you find your dream home.
Get Pre-Approved for a Home Loan Now
We can pre-approve you quickly and easily for a mortgage. In fact, you will find that pre-approval from Lake Mortgage is as “good as gold.” Since we have been in business in Indiana since 1946, sellers throughout the state are familiar with our name and know it is one they can trust. That can seriously enhance your negotiating power when you present your pre-approval letter. Ready to get started? Please give us a call Lake Mortgage today at (219) 756-5626 to get pre-approved now.