Nearly half of all homebuyers begin searching for a home without being pre-approved for a mortgage, which often results in problems. As a result, many real estate agents require buyers to be pre-qualified or pre-approved before taking them to preview homes. And, many sellers only want their home to be shown to buyers who have been pre-approved.
Why People Think a Pre-Approval Is Not Necessary
Despite the advantages of getting a mortgage pre-approval before buying a home, 42% of homebuyers still believe there is no need to be pre-approved.
Sometimes, even well-qualified homebuyers neglect to be pre-approved for a mortgage.
- Excellent Credit: Buyers with a great credit score sometimes think they do not need to be pre-approved. However, a mortgage pre-approval reviews many more things other than just the credit score. As a matter of fact, buyers with an excellent credit score may not be able to borrow as much as they think due to other negatives with their overall finances.
- Steady Employment: Another reason some buyers neglect to get pre-approved for a mortgage is that they have a good job and great employment history. However, many people with a great job cannot qualify for a mortgage.
Even if you are the best-qualified homebuyer, it is still important to be pre-approved for a mortgage. Real estate agents and sellers have no way of knowing you are well qualified to buy a home unless you are pre-approved for a mortgage.
Why Should You Get Pre-Approved for a Mortgage Before Working with a Real Estate Agent?
Real estate agents and sellers don’t want to waste their time, and don’t want to miss selling the property because they are working with an unqualified buyer. So, many agents and sellers only work with qualified buyers who have been pre-approved for a mortgage.
Some of the top reasons for being pre-approved for a mortgage before working with a real estate agent include:
- Know how much you can afford to pay for a home: When you are pre-approved for a mortgage, you learn how much you can borrow to buy a home. You also have a good idea of the expenses involved, such as the down payment you will need and the closing costs. So, once you have been pre-approved for a mortgage, you have a very good idea of how much you can afford to pay for a home.
- Agents and buyers take you more seriously: When you are pre-approved for a mortgage, you receive a pre-approval letter to show that you are qualified to buy a home up to a certain amount. Also, as a pre-approved buyer, you can move more quickly to close on a home, which is an incentive for sellers. Therefore, both real estate agents and sellers take you much more seriously as a homebuyer if you have been pre-approved for a mortgage.
- Smoother, faster process: Buyers who are pre-approved for a mortgage typically have fewer problems negotiating and closing on a home because they have already done a great deal of the work toward getting a mortgage. Therefore, the entire process of finding, buying, and closing on a home is much smoother and faster, compared to a buyer who is not pre-approved.
When Does a Mortgage Pre-Approval Not Matter?
Getting pre-approved for a mortgage does not matter if you are paying cash for a home.
Marimark Mortgage is based in Tampa, Florida and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in conventional home mortgages, FHA, VA, and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.