Is it Worth Getting Pre-Approved?

30 Jun Is it Worth Getting Pre-Approved?

When looking to buy a home there are a number of steps you need to take, before you even get to the point where you can start going to home opens.

The reality is that the very first thing most people should be doing is talking to their mortgage broker in Melbourne and getting their finances pre-approved.

Pre-approval is a very important step in the overall process and it will allow you to move forward with confidence.

What are some of the reason to get pre-approval?

Knowing How Much You Can Spend

While we all want to live in our dream home, the reality is that for most of us, we are constrained by how much the bank will lend us. For the most part, our borrowing capacity will be limited by our earnings and other ongoing debts and expenses.

Getting a clear idea of what that capacity looks like, will shape what type of home you can afford and certainly what area you can buy in.

There’s no point looking at areas you simply can’t afford and your mortgage broker in Melbourne will help with this.

It Makes Your Offer Stronger

Having a pre-approval in place at the time of offer, makes you stand out as a serious buyer. That means your offer has a lot more weight than others.

If you’re looking to buy a property that is being hotly contested with multiple offers, then your offer will need to be strong. In the current lending environment, a pre-approval means that your subject to finance clause is not such a worry to the vendor.

It could be the difference between securing your dream property and missing out with all other factors being equal.

Settlement is Faster

If you’ve got all your documents together and you’ve been pre-approved, the actually next stage of the process will be quicker and easier. That means settlement can happen faster.

A vendor might be more willing to accept a lower offer for a quick settlement and if you’re pre-approved and confident, that might be something you can offer.

It Will Help with Agents

When a deal falls over because of finance, it’s a worst-case scenario for an agent. They are paid when the deal gets done and if a buyer can’t close because finance was rejected, then everyone loses.

Having a pre-approval will mean the agent is much more likely to work with you and might even put your name ahead of some others.

This has certainly been the case in recent times, when buyers needed to be vetted closely, even just to secure a viewing.

Other Considerations

Pre-approval is an important process and something all serious buyers should be doing. Speak to your mortgage broker in Melbourne and get the process started. It will put you in a far stronger position.

It’s also worth noting that not all pre-approvals are created equal. Some lenders assess applications for pre-approval using their software only and are still required to be looked at by a loan officer when the time comes. That means you are not really comparing apples with apples. That’s the first thing a mortgage broker in Melbourne will be able to help you with.

Pre-approvals also don’t last forever. Generally, they are valid for three months, but they are also subject to change if your circumstance change, so you’ll need to keep that in mind when applying.