Why Getting Preapproved Is Important When Buying A House

When you feel you are ready to purchase a home, your first step should be to visit a lender to get preapproved for a loan. While this process is not mandatory when shopping for a home, it does offer benefits. Here are the three main benefits you will receive by getting preapproved before you begin house shopping.

You will know how much you can afford

Buying a house is a huge step in life, and you should take every step necessary to make sure you buy a house you can afford. Going through the preapproval process will help you with this. The lender will want to see your paystubs, income taxes, and credit report to find out where you stand financially. From there, the lender will either approve or deny your loan request. If the lender approves it, they will give you parameters as to how much money they will loan you.

You can use this amount to shop for homes within this price range, and don't forget to take your down payment into consideration with this too. The loan amount the bank will give you does not include your down payment amount, so you may be able to afford a home that costs more than the amount of the loan the bank will give you.

It will speed up home-buying process

The second benefit of getting preapproved first is that it will help you buy a house faster once you find the right one. You will already have most of the paperwork completed when you make your offer, so the lender will be able to process the loan documents a lot faster.

Seller is more likely to accept your offer

If you are preapproved for a loan, the seller of the home is more likely to accept your offer. The seller would probably feel confident with agreeing to sell you the home because he or she would know that you are qualified to buy a house. If you are not preapproved, the seller takes a risk that you might not be able to get a loan. This could tie up the house in your purchase agreement for a while, and the deal could end up falling through.

Once you get preapproved, it's important to make sure nothing changes with your finances during the time you are house hunting. Any negative changes could cause the bank to deny your final loan, even if you had been preapproved originally. If you are ready to begin shopping for a house, contact a real estate agent in your area for help with finding the right one.

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