Loan pre-approval give buyers a great buying and negotiating powers
Do not confuse loan pre-approval with loan pre-qualification for a mortgage loan. Loan pre-approval gives you much greater degree of certainty of getting your loan funded.
Lenders normally pre-qualify a borrower based on what a borrower states on the application. To pre-approve a loan application, most residential lenders require complete loan application, credit check, income verification and down-payment verification. Commercial lenders also require appraisal report and property inspection in most cases.
It is wise decision to get your loan pre-approved before you make your final real estate buying decision. Loan pre-approval gives you many advantages:
- Your lender will give you more details about your loans (interest rate, payment, APR, closing costs…), disclosures, and loan conditions associated with your loan pre-approval.
- You’ll know your maximum loan amount your lender is willing to loan you, which helps you narrow down your search to affordable properties.
- Your real estate agent/broker will make stronger commitment working for you because he/she knows you’re ready.
- If your application is dis-approved, your lending consultant usually offer advices and instructions on how to get ready.
- You’ll have more credibility with sellers. Most sellers do not want to consider your offer without knowing your loan status. A number of sellers only show their properties to qualified buyers.
- If your don’t have loan approval at the time you’re ready to make an offer, you could lose out on the property to someone who is already pre-approved.
- Loan approval takes time. Many real estate agents or sellers do not want to to waist your their times working with not-ready buyers.
- Loan pre-approval gives you at least some peace of mind; loan pre-qualification normally does not.
In general, loan pre-approval give buyers a great buying and negotiating powers.