Benefits of a pre-approved home loan for a buyer.
While you are in the process of buying a new home, a pre-approved home loan helps you check your eligibility and plan your finances accordingly. When buying a house in the States, you will complete a mortgage application and this information goes to a lender for approval. You then have to qualify in a credit check, and if everything works out, you will receive a preapproval letter as an offer for a certain amount by a lender, valid for 90 days.
Lenders do all kinds of checks before granting this offer. They enquire about your credit card status, your car loan payments, information about bank accounts, and your income. So it’s best to get yourself a pre-approval letter which comes with several benefits :
Some of the benefits of pre-approved home loan for a buyer are
1. Competitive advantage:
Getting a loan pre-approved means that you have already undergone one of the trickiest steps of the purchase process. Hence you can now focus your time and energy on searching for the most suitable property available in the market for you.
The reality is, each home on the market can only go to one buyer. To maximize the prospect that your offer is accepted, sellers got to know that your offer is serious.
Getting pre-approved depicts that you are financially ready and, within the event that your offer is accepted, there'll be no hold-ups in obtaining your mortgage. This assurance is what sellers want to understand about their potential buyers, especially during a seller’s market.
3. Home Search:
Not only does pre-approval help to strengthen your case as a buyer, but in addition, it also Indicates your affordable price range.
By knowing your budget, you'll be ready to hone your home search and begin preparing offers, eliminating any potential wasted time watching houses you can’t afford.
4. Closing Process:
After your loan is approved, you're able to sign the ultimate loan documents. you want to review the documents before signing and confirm that the rate of interest and loan terms are what you were promised. Also, it is important to verify that the name and address on the loan documents are accurate. The signing normally takes place ahead of a notary.
There also are several fees related to obtaining a mortgage and transferring property ownership which you'll be expected to pay at closing. Bring a cashier’s check for the deposit and shutting costs if required. Personal checks are normally not accepted. you furthermore may get to show your homeowner’s policy, and the other requirements like flood insurance, plus proof of payment.
Your loan will normally close shortly after you've got signed the loan documents. On owner-occupied refinance loan transactions federal law requires that you simply have 3 days to review the documents before your loan transaction can close.
5. Negotiation Room:
While a home inspection may be a valuable thanks to get to understand your new potential home, it also can be used as a negotiation tool. One option is to reassure the vendor early that they won’t be buried in inspection requests by saying you'll only request the vendor to deal with repairs that trade-in with severe structural and mechanical defects.
Buying a house is a process and, during a seller’s market, it can take multiple tries before buyers get their home. But from his experience, Sharp said even within the best markets, there’s typically a home out there for you. It’s just a matter of creating sure that you’ve done your work upfront.