Buying a house is one of the biggest commitments you will ever make. Between the time it takes to maintain the house and the financial promises you will make and need to keep, being a homeowner certainly comes with a lot of responsibilities. With all of this responsibility, it makes sense that there are many hurdles to buying a home in the first place.
As a home is such a big purchase, you will need to find a lender who is willing to trust you with a very large loan, which is the mortgage. Getting a mortgage can either be very easy or very difficult depending on a lot of factors, but it is nearly impossible to buy a home without one.
Since you will need to get a mortgage anyway, it is a good idea to get a mortgage preapproval earlier in the home-buying process than later. A mortgage preapproval can help to separate you from other buyers, as it shows that you are prepared, committed, and able to act more quickly than some other bidders in the same market.
What Exactly Is a Mortgage Preapproval?
A mortgage preapproval is an official document from a mortgage lender stating they will provide you a mortgage up to a specified amount. Essentially, a mortgage preapproval is as close to an actual mortgage as you can get without buying a home. The mortgage lender checks all of your background information, vets all of your documentation, scours through your finances and ultimately decides how much money they are willing to lend you.
Why Should You Get a Mortgage Preapproval?
1. It shows that you are seriously interested and organized
If you have a mortgage preapproval, a seller automatically knows that you’re ready to pull the trigger on a home. Sorting out paperwork with a mortgage lender can be a time-consuming task, and ultimately can lead to major delays in the closing of the sale of a home. If you are already preapproved for a mortgage, sellers know that there will likely not be any delays, and they may opt to accept your bid over someone else’s because of this.
2. It may give you more negotiating power
If a seller wants to sell their home quickly, odds are they will only want to work with buyers who they think can actually follow through on the sale. That feeds into the point above. However, if there is anything external causing them to be in a hurry to sell, a preapproval might give you a little bit of bargaining power. Since your preapproval likely gives them confidence that you are ready and able to follow through on a sale, they might be more willing to meet any demands you have to get the sale done. If you want the seller to cover some of the closing costs or help fix the leaky roof before you buy, they might be more willing to accept.
3. You might be able to move into your home sooner
Finalizing your mortgage approval can really delay your closing on a home. Mortgage lenders want to see a laundry list of documents that prove you are whom you say you are and you can pay them how much you say you can pay them. Vetting your documentation can be a very drawn-out process, and waiting to do this until after you make an offer on a home can delay things for both you and the seller. If you get a pre-approval, the bulk of this is already done before you make an offer on a home, which often shortens the time between when you submit your offer and when you get the keys to the home.
Are a Mortgage Preapproval and Prequalification the Same Thing?
Many prospective homebuyers confuse mortgage prequalification with mortgage preapproval. Preapproval, as we just explained, is a very detailed and official process that requires a lot of work by both you and your mortgage lender. Mortgage prequalification is a much simpler process where a mortgage lender takes a general look at your income and credit score and provides an idea of how much money they’d be willing to lend you. Mortgage prequalification is nice, as it gives you a more accurate idea of how much money you can afford to spend on a home without the need to provide tax returns, pay stubs, and other personal documentation.
How Long Does a Mortgage Preapproval Take?
The mortgage preapproval process varies greatly depending on the lender. Some lenders can complete the process in a matter of days, while others require weeks to finalize the preapproval letter. Typically, you can expect the process to take somewhere between one and two weeks.
How Long Is a Mortgage Preapproval Good For?
Generally, mortgage preapprovals are good for 90 days. If you choose to buy a home outside of this 90-day period, you will likely need to contact your mortgage lender to get a new preapproval letter drafted.
Does a Mortgage Preapproval Guarantee the Interest Rate?
Mortgage preapprovals are calculated based on the current interest rate, but interest rates are highly variable. If you wait a couple of months to buy a house, the interest rate likely will have changed. Depending on the current market environment, the new interest rate could be either lower or higher than the previous interest rate.
Thanks for reading our post on mortgage preapprovals! Hopefully this post has provided you with everything you need to know about mortgage preapprovals before you buy a home. Getting preapproved for a mortgage is hard, but no harder than getting a mortgage itself. For this reason, we highly recommend that you seek out a mortgage preapproval before you are ready to put an offer down on a house. There is a good chance that the seller of your new home will look favorably on your preapproval, and it could mean plenty of positive things throughout the closing process.
While every situation is different, getting a mortgage preapproval is almost always a good idea, if it is within your means. It speeds up the homebuying process, earns you negotiating power while you explore the housing market, and gives you extra clarity as you shop for a new home. There are very few drawbacks, if any, to getting a mortgage preapproval before making an offer on a home.
If you visit Myrtle Beach or any other place in South Carolina and fall in love, we’re here to help. We at The Boyd Team are committed to helping you find the right property for your needs and dreams. Any question that you have about moving to the area and finding your dream home by the beach is our pleasure to answer. Feel free to send us an email at eddie@boydteam.com or text or call us at (843) 222-8566, and we will get back to you as soon as we can. Being true natives of the Grand Strand and Horry County and with over 25 years of experience in the local real estate market, whether buying or selling, we can help you make your dreams a reality.
No One Knows The Grand Strand Better! Trust, Knowledge, Experience, and Professionalism You Can Count On!
