Pre-Approval Letter: It Only Helps ... In Many Ways
Prior to shopping for a house, it is recommended to obtain a pre-approval letter from a mortgage lender. This letter declares that the lender has obtained your credit report and a preliminary mortgage application. Furthermore, the lender intends to finance you for a certain amount of money.
The purpose of the pre-approval letter is threefold:
1. This letter will let you know what price of home you can qualify to buy. You will also know what your monthly payments for the home will end up being.
2. By sharing this information with your Realtor they will be able to guide you to homes that are within the price range of what you are pre-approved for and to homes they feel like they can negotiate to your price level.
3. It will look good to a seller when you make an offer on a house. The seller will feel more confident in your offer because you have loan approval. If you are in a competing bid situation then your offer will look better then an offer without a pre-approval letter. I have even seen lower offers get accepted over higher offers because of the pre-approval letter.
So act now and get a Pre-Approval Letter!