Securely obtaining your financing for a home is not considered one of the benefits of becoming pre-approved. Pre-approval allows you the ability to distinguish how much home you can actually afford and should be considered the beginning of the home buying transaction.

What You Gain By Becoming Pre-Approved

If this is going to be your first home buying experience, you will gain vast knowledge about the mortgage process and the financial aspects of your note. Receiving a “Good Faith Estimate” from your lender is another very important benefit. This estimate will break down the fees associated with your transaction (closing costs), while allowing you to determine if your lender is over charging you. In any real estate market, presenting a pre-approval letter to the sellers when making the offer to purchase shows good motivation and also gives you a reputable position with the seller. Becoming pre-approved will also save valuable time and effort when searching for your home, because you will now know exactly what you can afford. What you gain by becoming pre-approved is a solid position and understanding of your abilities to purchase your next home.

Credit Score

Your credit score is very important to any lending institution. Having a general idea about your credit score will help ease you into the lending process. Credit scores should be above 700 for the best interest rates available. If your score is lower than 700, you can put money down on the home, which will allow the lender to reduce your interest rate. Credit scores less than 550 will be hard to get a good interest rate and will typically be “brokered” out as B paper.

How Can Agents Help?

Agents have excellent relationships with numerous lending institutions. Because they understand this process so well, they can comfortably walk you through while educating you. You can be pre-approved tomorrow and making an offer to purchase the day after. If you would like a professional to take care of this for you, many agents can have a few lenders call you directly and fax your pre-approval letter to as soon as possible.

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