Securing a loan is one of the most complex and stressful steps of buying a house, which is why most agents recommend taking care of it ahead of time. While lining up a mortgage before going house-hunting isn’t required, it can make the entire process smoother. The following overview explores why pre-approval is a great first step to finding your dream home.

What Is a Mortgage Pre-Approval?

Pre-approval lets you complete the entire mortgage application process before making an offer on a home. To get pre-approved, you’ll need to prepare the loan application packet, including collecting your tax returns, bank statements, and other financial documents.

Once your application is approved, you’ll receive a letter from the lender acknowledging that your loan has been processed. They’ll also detail precisely how much you can borrow, helping you establish a budget.

The Benefits of Pre-Approval

Being pre-approved for a mortgage minimizes the chances of a sale falling through after your offer has been accepted. Instead of rushing to secure a loan, you simply notify the lender that you’ve chosen a property. This also means you can close faster than borrowers who wait until after finding a property to apply for a loan.

A pre-approval letter makes your house hunt faster and easier. Lenders will likely give your offer extra consideration if they know you’ve already lined up a loan. They may even be willing to accept a lower price in exchange for a faster sale and smoother closing process.

How Pre-Approval & Pre-Qualification Differ

Pre-qualification is similar to pre-approval, but there are some significant differences. Pre-qualification decisions are based on a borrower’s self-reported financial information, which the bank uses to decide how much you qualify for. The pre-qualification letter is not an official loan offer, so you must still go through the application process.

Pre-qualification is fairly fast and easy, making it a convenient tool for comparing fees and interest rates from different lenders. However, when you’re ready to buy a house, it’s best to take the next step and get pre-approved.

If you’re hoping to buy a house anywhere in the Osseo, MN area, The Giving Group makes it easy to find your dream home. They maintain a wide network of sellers, offer rebates to successful buyers, and donate a portion of each commission to charity. Visit the website and follow their Facebook to browse houses for sale, or call (763) 221-1786 to speak with an agent.