5 Reasons It's Important to Get Home Loan Pre-Approval
When you’re looking to buy your first home, every step towards that end goal is important. But a home loan pre-approval is one of the most important… and the most exciting. It’s this moment that gives you the green light, the go-ahead, the all-clear, to really begin looking for, negotiating and, ultimately, purchasing, the home of your dreams.
Of course, there are other reasons that getting a home loan pre-approval is important and it goes far beyond just achieving your own goals. Let’s check them out.
5 Reasons It’s Important to Get Home Loan Pre-Approval
Verify Your Buying Power
First and foremost, your home loan pre-approval (sometimes also called a ‘conditional approval’) verifies your buying power. Some buyers start off by relying on online calculators. But these are not customised to your situation and can only give you a general indication of what you might be able to borrow and spend.
On the other hand, pre-approval shows you exactly the amount that you can afford to spend on your new home. It takes into account your current living expenses and other financial commitments. And it gives you a clear spending limit, letting you focus your energies on homes that fit within your spending budget.
Outsmart the Competition
Buying a home can sometimes be a cut-throat competition. But your home loan pre-approval can help you outsmart the competition. You see, your pre-approval doesn’t just verify your buying power to you, but also to potential home sellers.
Your pre-approval lets you move fast when the market is hot and competitive. You know what you can spend and so you’re ready to make an offer quickly or even on the spot. You and the potential seller also have the confidence of knowing that you’ll be able to get your finances organised quickly. And this gives you a leg up on the competition and puts you in a strong negotiating position.
Close Faster
It generally takes about 50 days to close on a new home. And part of this delay can be attributed to waiting for mortgage approvals. But if you’ve already got your home loan pre-approval, you can ensure the entire process goes more quickly and smoothly. And that means you’ll potentially be in your new home more quickly as well.
Sometimes sellers are under pressure to move quickly themselves. Perhaps they’re looking to get into their dream home too, or need to liquidate their assets for other reasons. When you’ve got a home loan pre-approval you’re a far more attractive buyer to that category of seller because they know that you’re in a position and motivated to move quickly as well.
Home Loan Pre-Approval Saves You Time and Money
Time is money, but your home loan pre-approval can save you both. Too often buyers spend months (or even years) searching for the right property, only to find that they aren’t able to get the financing they need. This is a waste of your time, of course, and a significant opportunity cost when you aren’t able to get the home that you want.
Understanding your budget means you can laser focus your search, only spending time and resources on those homes that you want and can actually afford.
Home Loan Pre-Approval Protects Your Deposit
When you buy a home you’ll likely need (and want) a deposit. But you don’t want to hand over your hard earned money without being absolutely confident that you’ll be able to get the home loan you need to complete the purchase. If you aren’t able to get the financing you need, you could lose the full amount of that deposit.
This is particularly important if you’re buying at auction because in that situation your deposit is non-refundable.
Speak to an Expert
When you’re ready to begin your new home search, we’re ready to help. Our expert team can talk to you about how to get home loan ready, and help you get started on the process of getting a home loan pre-approval, and getting into your dream home.
