5 Reasons Your Agent Wants You Pre-Approved Before Showing You Homes
Ever had an agent deny to show you a home because you weren’t pre-approved for a mortgage?
Shopping for a home before getting pre-approved for a mortgage is like walking into a grocery store without a wallet. You may have the desire to buy, but you lack the ability. Let’s cover some basics…
What is a mortgage pre-approval?
In a nutshell, a mortgage pre-approval is written confirmation from a lender (bank or mortgage broker) that you’re able to borrow money to purchase a home up to a certain amount. It’s based on your income, employment, assets and debts you provide to them at the time of application, in conjunction with your credit history. Here are the 6 reasons you should be pre-approved:
1. It carries more weight than a “pre-qualification”.
A pre-approval is better than a pre-qualification. A pre-qualification is only an estimate of how much you can afford. With a pre-approval, the lender has actually checked your credit and verified your documentation to approve a specific loan amount (usually for a particular time period such as 30, 60 or 90 days). A pre-approval always carries more weight.
2. You’ll know how much house you can afford.
Knowing what you can realistically afford narrows down the options and makes the selection process more efficient. It also protects you from the unpleasant surprise of realizing the home you fell in love with doesn’t fit your budget.
3. It adds clout to your offer.
Certain parts of Ottawa has seen an increase in multiple offers. If the sellers are weighing one offer against another, they want to make sure that the offer is solid and financing won’t be a hinderance. Pre-approvals instill confidence that the buyer is financially capable of purchasing their home.
4. It saves time and reduces stress.
Obtaining a mortgage is a lengthy process. Once you’ve found the home you want to buy, the last think you want to do is spend the time gathering your documents and worrying about whether or not you’ll get the mortgage. With a pre-approval, you’ve already done the hard work.
5. Without it, most agents won’t work with you.
Think about it: when you hire an agent, he/she will invest countless hours showing you homes over the course of your house hunt. They don’t want to waster their time, the seller’s time or your time showing you homes that are not within your budget.