The Benefits of Mortgage Preapproval

Financing your home: are you ‘pre-approved’ yet? 

While experts recommend mortgage preapproval for almost everyone in the market for a new home, the following groups in particular, generally reap the benefits of pre-approval:

First-time buyers unfortunatley, are often seen as an unknown quantity both by sellers and lenders, simply because they have no equity. A bidder who has equity would have an advantage over a first-time buyer in a competitive situation unless the first-time buyer had mortgage pre-approval, which then alleviates any concerns the sellers may have regarding the level of qualificaton of the  buyers, and the strength of the offer. 

Self-employed individuals, who may in fact be successful, can 'look bad on paper’ as far as the lending institution is concerned. When business expenses are high, the result often is lower-than-expected bank balances. Many of these expenses are "written back" in tax deductions. There are many new financing options these days for contracted, or self-employed individuals, some mortgage products just require you to ‘state’ your income – Please contact me for more information on these new financing options and I can put you in touch with a mortgage specialist to meet your needs. 

Free-lancers, particularly, tend to live the type of boom-and-bust existence that often makes lenders nervous. Their approval process may take longer than that of a full-time employee who, for example, has held the same job with salary or regular income, for years.  In a competitive market, time is precious, and preapproval keeps self-employed home shoppers in the running.

Home sellers often need to find and buy a house quickly once their current home sells. Mortgage preapproval facilitates this process for the seller as well.  Conversely, keep in mind that home sellers are often interested in non-contingent offers, those that don't depend on any other sale or condition – including financing!. Given that they may be selling and buying a home at the same time, they may not want to complicate matters by dealing with another party doing the same.

How much House Can I Afford?