Obtaining a mortgage pre-approval early in the home finding process can greatly enhance your negotiating power and will give you a valuable competitive edge. With your purchasing power known, house-hunting tours can be focused on appropriately priced homes for sale. When you make an offer, sellers will view yours more favorably because having a mortgage pre-approval removes any doubt about your ability to obtain financing. At Napier Realtors® ERA, many agents report circumstances when their buyer's offers competed with and prevailed over other offers solely on the strength of their mortgage pre-approval. When negotiating to purchase a home, your offer and counter offer strategies can be crafted based on the terms that are best for you. For instance, you may benefit more from seller paid points or closing costs than from a lower selling price, or vice versa, depending on the lenders' terms. It is critical for you to know the best strategies up front because it is nearly impossible to re-negotiate a contract at a later time.
Do not mistake mortgage pre-qualification for mortgage pre-approval, they are not the same.
Mortgage pre-qualification has little or no value because it is only based on the answers given to a simple, brief interview by the lender. Mortgage pre-qualification gives no guarantee that a loan will be granted. In contrast, mortgage pre-approval means that an application has been completed and reviewed, a credit report has been obtained and the lender has agreed to loan a specific amount of money to the buyer.
The significant differences between pre-qualification and pre-approval are well known by agents and sellers. Home closing can be expedited and streamlined by obtaining an early mortgage pre-approval.
For assistance in determining how much house you can afford or to obtain mortgage pre-approval, contact our in-house mortgage company, Movement Mortgage.