There are many people who are considering buying a home because the current market is so attractive. With the ability to carry out virtual tours, this makes it even easier for people to find the home of their dreams.
While the fun part is looking at houses, it is important to get pre-approved for a home loan first. There are a few reasons why everyone must get pre-approved before they start the process of shopping for a home.
This Provides A Chance For People To Get Their Finances In Order
Buying a home is a major decision. For many people, this is going to be their biggest investment. For this reason, it is critical for everyone to have their finances in order.
Of course, some people might think that their finances are fine when, in reality, this might not be the case.
For example, someone might be self-employed and think they are doing well; however, many lenders will not accept self-employment income as “reliable” unless they see at least two years of tax records. Furthermore, because those who are self-employed often take large tax deductions (due to business expenses being deductible), their gross taxable income is also lower.
This can be a problem for lenders who want to make sure their borrowers have a high gross taxable income to pay back the loan.
Increases The Attractiveness Of An Offer
If someone finds a house they love, there is a strong chance that someone else has fallen in love with the home as well. The seller wants to make sure that whoever is providing an offer on a home is a serious candidate. With a pre-approval letter, this makes the offer far more attractive.
This is because the seller knows that nothing is going to hold up the sale. If someone isn’t pre-approved, there is a chance that they might make an offer on the home only to have it stonewalled by the lender. This can be frustrating for someone who is trying to sell a home.
Avoid These Problems By Getting Pre-Approved
In order to avoid these problems, everyone must get pre-approved before they start the process of searching for a home. By getting pre-approved, people can expedite the home buying process.
The vast majority of people who are interested in buying a home are not going to be able to pay cash for the home. Even for those who can buy a home in cash, they often would rather take out a loan to avoid pulling money out of their investments where they would have to pay capital gains taxes.