8 Reasons to Get Pre-Approved for a Home Loan

Learn why pre-approval is one of the smartest moves you can make when shopping for a home. You wouldn’t head to a cash-only farmer’s market or craft
fair without knowing how much cash you had in your wallet. So why would you start shopping for the biggest purchase of your life, a new home, without
knowing how much you could spend?

Fortunately, knowing how much you can spend is easy: Get pre-approved for a mortgage before you start any serious home-shopping.
Here’s why getting your loan pre-approved is so important:  

1. The pre-approval process establishes an all-important relationship between you and your lender.  

2. Getting pre-approved tells you the maximum the lender is likely to loan you, which helps you narrow down your home search to affordableproperties.

3. You can get an idea of what your monthly payments would be.

4. You’ll have more credibility with real estate agents and with sellers if your loan is pre-approved. Some agents won’t take you seriously until you have the
pre-approval. They don’t want to waste their time, or yours.  

5. Mortgage loan approval takes time. If you wait to apply until you’re ready to make an offer, you could lose out on the home to someone who is pre-
approved.  

6. The lender often will lock in an interest rate, which protects you if rates rise while you are shopping for a home.  

7. If your circumstances don’t qualify you for a low interest rate, you’ll know that going in. You might decide to look in a lower price range to makeup the
difference.  

8. Pre-approval gives you at least some peace of mind, which you will appreciate during the often-stressful process of buying a home.

Don’t confuse loan pre-approval with pre-qualifying for a loan. Lenders will often pre-qualify a would-be buyer based on what you tell them about your
income, employment and basic credit information, like how much you currently owe on credit cards or other loans. The lender is not agreeing to loan you
money or committing to an interest rate. But the process can tell you whether it makes sense to move forward in your home search.
Loan pre-approval is a more formal process. You’ll need to provide the lender a lot of information about yourself, especially about your spending and
saving habits. Prospective lenders will generally make inquiries into your credit history and obtain your credit score.

If you get pre-approved, you’ll receive a letter telling you the maximum loan you can get and the interest rate you’ll qualify for. In some cases, you can lock
the interest rate in. Be sure you understand whether the interest rate is locked and when you can lock it when you get the pre-approval.
That pre-approval letter gives you a lot of power as a home buyer. Use it wisely.
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