Why You Need a Mortgage Pre-Approval Letter When House Hunting

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First time home buyers often have a full list of the types of things they want in their first house, such as a master suite and an updated kitchen. However, while knowing what you want is an important step in buying a home, getting a mortgage pre-approval letter when house hunting is just as important, if not more.

Here is why:

• House shopping can be overwhelming and difficult, but knowing exactly how much you have to spend on a home will help keep you focused on homes that you can afford instead of getting lost in appealing homes that are beyond your true budget.
• Real estate agents love mortgage pre-approval. They are more likely to take you seriously with a pre-approval letter, since many first time home buyers end up being flaky, causing many real estate agents to be reluctant to work with them. A mortgage pre-approval means that you are doing your homework and are serious about purchasing a home.
• Presenting a mortgage pre-approval letter as part of an offer to purchase a home shows that you are not only serious about buying a home but that the mortgage approval process should go smoothly, making your offer more appealing since it is more likely to close on time. This may give you an edge if there are other offers on the home.
• A pre-approval is more appealing to home sellers than a pre-qualification letter, which is easy to obtain in a few minutes off the internet. A mortgage pre-approval letter shows that you spent the time and effort towards pre-approval for the mortgage.

Once you obtain a mortgage pre-approval letter, remember that the number is not binding until you actually apply for the loan through the bank and this process can be time consuming.

Remember to keep your pre-approval budget in mind when you look for homes and know that every homebuyer has to make at least a few compromises. There are few “perfect” homes out there unless you have millions of dollars to spend, so remember to be flexible.