So, you want to buy a house and you may have heard that it’s good to get this thing called a pre-approval, but exactly what does it mean to be pre-approved to buy a home?
We’re glad you asked. It shows you’re serious about buying a home. But before we go into that, let’s start with an explanation of what a pre-approval actually is.
Mortgage Pre-Approval
Merriam-Webster defines pre-approve as “to approve (something or someone) in advance.”
In home-buying terms, pre-approval means that a mortgage loan officer has looked at the details of your finances — your income, your current debt, your credit history, any assets you have — and has determined how large of a loan they would be willing to approve for you.
Getting a pre-approval requires you to complete a loan application with all of your financial information listed. It also requires the lender to run a credit check to verify it all.
You then get a pre-approval letter that you can include when you’re ready to make an offer to buy a home.
To be clear, the pre-approval isn’t a guarantee that you’ll actually get the mortgage loan. But it’s as close as you can get without having an accepted purchase contract in place.
Why it Can Be a Good Thing
As we mentioned before, getting pre-approved to buy a home — and having that pre-approval letter — shows you’re serious about buying a home. If there are multiple offers for the same home, a pre-approval letter can give your offer an advantage over others that aren’t pre-approved.
The letter shows the seller that you can actually close the deal if they accept your offer.
The pre-approval also means that the lender already has all of your financial information, which allows them to process the loan faster once you have an accepted offer. This is attractive to a lot of sellers as well.
A pre-approval saves time at the beginning of your home search as well because it clarifies the realistic price range that you can afford. This helps you narrow your search down to just the homes within that price range.
Looking to Buy a Home in Fresno?
If you’re looking to buy a home in Fresno, we’re here to help!
Send us a message or call us at 559-490-0207 today to start the conversation.