As you get ready to buy a new home, not only do you need to hire a realtor, put your current
home on the market (if applicable) and go to open houses, but you’ll also have to figure out
where you want to move to if you don’t already have a specific area in mind—as well as pick a
few alternative neighborhoods just in case for-sale properties are scarce or the homes are out of
your price range in your preferred location.
So, when someone tells you that you should also find the time to get pre-approved, you may not
be so susceptible to the idea, especially if you’ve never purchased a home before and do not
yet realize why it’s a significant part of the home-buying process.
But there are many reasons why it’s important to get pre-approved.
1. It pinpoints a price range. You should have a good idea about what your budget will be, but
getting a mortgage pre-approval can justify the budget you have in place or encourage you to
reconsider it, because you learn how large a loan you would qualify for based on your financial
2. It narrows down the neighborhoods you should consider. When you know your budget, you
also know what areas you can afford. This will save you, as well as your realtor, a lot of time and
energy because you can focus on the neighborhoods that are actually in your price range rather
than areas that would ultimately make you house poor.
3. It makes you look good to sellers. Most sellers want to say good-bye to their homes as soon
as possible so they can move on. But motivated sellers aren't going to like it if they need to wait
for a buyer to get approved for a mortgage before a serious offer can be made or accepted. This
means that the buyer still has to contact a mortgage broker, provide all the necessary
documents to them for review, and then wait to hear the verdict. Sellers will appreciate it if you
are pre-approved for a mortgage before you see their home because they can start negotiating
with you right away.
4. It speeds up the home-buying process. Another reason why it’s important to get pre-approved
for a mortgage is because you can jump right into looking for a home. By receiving a mortgage
pre-approval beforehand, you'll have fewer major hurdles to overcome when you decide to
make an offer. Plus, if you are not granted pre-approval right away, you’ll have ample time to
get your finances in order so you can re-apply without missing out on a home you’re interested