Edge Out The Competition With A Pre-Approved Mortgage


Most candidates who interview for a job would not think of going to the interview without a resume in hand.

In the Old West, a gunfighter would not think of going to a fight with an unloaded gun.

However, many homebuyers go house hunting without all the arrows in their quiver.

A very important step in the home buying process is for the buyer to arm themselves with a pre-approved mortgage loan before they begin their home search.

A pre-approved mortgage is a lender’s commitment to lend money to the homebuyer that specifies the loan amount for which the buyer is eligible.

To get pre-approved, a buyer needs to provide to the lender personal financial information such as income, debts and assets.

Applications may be approved with some caveats, however, the lender is committing upfront to the loan amount and interest rate. This gives the homebuyer confidence that adequate financing is in place before shopping for a home.

While cash buyers have an upper hand, having a pre-approved mortgage in place gives a homebuyer an edge in multiple offer situations because the pre-approval may be viewed by the seller as having cash in hand. In addition, an offer carries more weight with a pre-approval letter than it does with a pre-qualification letter or a contract submitted without any lender approval.

We have seen sellers accept offers from pre-approved or cash buyers over buyers with higher dollar offers who have not been pre-approved for a loan.

In other words, having a pre-approved mortgage increases the buyer’s negotiating power.

Having a mortgage in place gives you another advantage. Frequently, sellers will look at offers and evaluate how quickly the buyer can close escrow on the property.

Those who have started the loan process early on may have an advantage over non-qualified buyers because they may be able to shorten the escrow period by one to two weeks.

Working with a mortgage lender before shopping for a home gives the buyer time to evaluate the loan product that will best suit their needs.

The buyer will also know how much of a loan they qualify for and how much they can afford to spend. The buyer and Realtor can then focus on homes in the appropriate price range.

Ray Pugel is a designated broker for Coldwell Banker Bishop Realty. Contact him at (928) 474-2216.


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