Why Do Sellers and Realtors Want Me To Be Pre-Approved?

June 24th, 2018

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Always get your mortgage pre-approved! Homeownership is a major component of the American dream. It provides you with your own piece of property to put down roots and live your life. You might think the process starts when you first go out hunting for houses or condominiums. But it often begins long before the initial meeting with a realtor when you contact a lender for pre-approval. Here are a few reasons why the seller and listing agent might want you to get pre-approved.

Pre-Approval Makes Your Offer More Attractive

A realtor’s job is to get the best possible price for the client. But it needs to be an offer that’s likely to close. When multiple buyers submit offers on a property, it’s up to the realtor and seller to choose the most overall attractive one.

Sellers want the entire transaction to go through smoothly, and hang-ups in financing could cause delays and even cancellations. By submitting a letter that includes your pre-approval for a loan, you’re demonstrating a lender’s faith in your ability to complete the sale, and that can make your offer more attractive to a realtor.

The Process Often Goes Faster

For many homeowners, time is of the essence as there are a number of different reasons why he or she might want to move out of the home. Whatever the reason, a faster transaction is usually preferable.

While it takes the successful completion of a number of different tasks before the transaction is finalized, there are things that can be done to move the process along faster. When you take the time to go to a lender for pre-approval, you’ve already gone through a credit check and income and asset verification. This could shave time off of the process.

You’ll Get a Better Idea About Your Price Range

House hunting can be exciting as you get to go from one property to the next and think about the different possibilities. A realtor will be more than happy to show you as many homes as is necessary to find the perfect match. But they’ll want you to first find out how much property you can afford. By going through the pre-approval process, you’ll get an independent opinion on your buying power before you make any appointments for showings.

You might be wondering why your realtor wants you to add this step to your homebuying process. There are a number of different reasons. It’s always best to work with informed buyers, and an evaluation of your finances is an important piece of information.

You Could Have Extra Negotiating Power

In a hot market, it’s not uncommon for a seller to get numerous offers. By including a pre-approval letter with your offer, you’re making an assurance you’re financially able to complete the purchase. This could be the leverage you need if you’re competing with another buyer who didn’t go through this step, or who only got pre-qualified.

What It Means To Be Pre-Qualified

When you hear the term pre-qualification, you might think of it as interchangeable with the process of getting pre-approved. But the differences are much more than semantic. Getting pre-qualified is a much less thorough vetting that can often be done quickly over the phone. It’s a decision made by a financial institution based solely on information provided by the borrower. Some realtors might not take you seriously as a potential buyer. You also won’t get the same level of insight into your overall purchasing power.

The Process of Getting Pre-Approved

Now that you know some of the reasons why it makes sense to get a pre-approval from your lender, it can also be helpful to gain some insight into the overall process used to make an underwriting decision. Before you choose a lender to get pre-approved, you should first organize the documentation needed to support your financial claims:

  • Proof of income, which is usually two recent pay stubs
  • List all of your employers for a minimum of two years, complete with addresses and phone numbers for verification
  • Bank account information, so the lender can verify your available cash
  • Gift letters to verify any gifts from family members you might be using to bolster your finances
  • Information about debts such as credit cards, student loans, car loan, etc.
  • Tax documents, which can mean W-2 statements and tax returns for the previous two years
  • Your list of residences for the last two years

Now you’re ready to choose a lender and make your case for pre-approval. You will fill out a mortgage application. Since you’re at the beginning of the home buying process, you’ll leave the property information section blank.

Get A Pre-Approved Today

No matter if you’re in the market for your starter home, you need something bigger for a growing family or you’re simply looking for a change in scenery, the first step in the process should be pre-approval for your eventual mortgage. Once you’ve gotten the go-ahead from your financial institution, you’ll be armed with the information necessary to find the perfect house and make a competitive offer. Let Brian Martucci help you get you pre-approved.





Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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