What is the Benefit of a Pre-Approval for Your Mortgage? – meilleur taux hypothecaire
If you are looking for a new home, don’t leave home without it-a pre-approval for your mortgage, that is. Despite what many people think, you do not have to wait until you are under contract for a home to apply for the mortgage. Instead you should start the application early and get a pre-approval loan before shopping for your new house.
The mortgage will not be finalized until an offer has been made on a property because the property is collateral for the mortgage and therefore has to be approved, but since most of a mortgage approval rests upon the credit of the applicant, this part of the process can be handled ahead of time.
For this reason, a lot of knowledgeable home buyers begin the process and receive a pre-approval letter ahead of the home shopping expeditions.
There are three very good reasons for requesting a pre-approval loan.
The first and most basic one is that it gives the buyer a clear idea of how much he can spend on his home. Realtors will now be able to focus on the homes in the right price range for the buyer.
Next, a pre-approval is one of the best bargaining devices a buyer could possess. If two buyers are interested in a home, and one has to obtain financing before he can persue the offer ((in other words, makes an offer that is contingent upon home loan approval), clearly the one who already has a pre-approval in hand will be favored.
Some buyers go so far as to use this as a negotiating wedge to get a better deal. The buyer can offer a lower price than competingbuyers since closing is guaranteed by the approval letter. Even when there is another buyer who is offering more, a seller may not be willing to risk that he will get the mortgage, since if he doesn’t, the entire sale is lost.
The third reason is that once the offer has been made and accepted, the entire purchase process will go much more smoothly and quickly since the major part of the loan application process is already done. The normal closing period of a month can be reduced to as little as two weeks.
Don’t think that a pre-approval skips any of the steps in the mortgage process. Buyers still have to follow all of the steps in the mortgage application process and have the credit rating to qualify. But since the main contingency in a home purchase transaction, the mortgage, is already addressed, both the home search and the offer and contract procedures will flow much more smoothly – pret hypothecaire.
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