Understanding the Benefits of Pre-Qualified Mortgage

Even though it’s not compulsory, mortgage pre-approval is extremely vital when you’re planning to purchase a residential property, especially for first-timers. Doing so will provide countless advantages, which will not just save funds but also time. So, what are these benefits? Let’s find out through this post:

Learn about the borrowing capacity

When it comes to the primary benefit of being prequalified for a mortgage, knowing what the borrowing capacity is extremely important. Remember, the mortgage pre-approval is viewed as an attestation by the lenders. It shows the maximum amount that they agree, on specific conditions, to lend to you for buying a house. This will help you learn how much funds you can easily borrow from the outset.

Plan out the monthly payments

Once you know the borrowing capacity, you can quickly determine what the monthly payments for the mortgage will be. This monthly mortgage payment will depend heavily on the down payment you plan on making. When the payments are high, you can reduce the price you wish to pay for the house. Otherwise, you can increase the down payment.

Simplify the property search

Another primary benefit of being prequalified for a mortgage is that it will be easier to find a property of your choice. It’s possible when you know well about the borrowing capacity and the monthly payments you need to make. This can aid you in saving a lot of time as you don’t need to visit residential properties that are too costly. You can focus on all those properties that match your budget.

You will get more credibility as a purchaser 

When you have a mortgage pre-approval, you can let all the stakeholders within the transaction know that you’re a serious purchaser and have a good monetary situation. This particular status will provide you extra negotiating powers on the promise to buy and during countless offers on the exact property. This will surely give you more advantage over all those purchasers who are not pre-approved.

Protect the interest rate

Once you get a mortgage pre-approval, you will also get a guaranteed mortgage rate. According to the lender, the rate you will get will be guaranteed for several months. It will be highly beneficial when the economic setting favors the rate increase.

You can quickly close on a house 

When you find a property of your choice, you may move in quickly. Experts say it takes a lot of time to receive mortgage approval and go through the closing process. Due to such reasons, you will find that the timeline has slowed down when you don’t receive a pre-approval or become pre-qualified.

When you find a reliable lender and submit the monetary information, you have to go through the last stage of the approval work instead of beginning from scratch. This will become a lot easier and quicker to complete the home-buying work. This is something the sellers, too, will appreciate.

The shorter timeline of the closing will approve the loan. Besides that, pre-approval can streamline the whole home-purchasing work, making it much faster than before. It will also increase the chances that your offer to purchase the home will get accepted. 

So, don’t think twice about speaking with the lender and receiving pre-approved before starting the property search work.

Ending Note

The information provided in this post will give you a clear idea about becoming pre-qualified for the mortgage. Be sure to go through all the points before purchasing a residential property.