Can pre-approval improve your chances of getting a home loan

| Apr 19, 2021 | real estate banking & finance | 0 comments

Seeking pre-approval for a home loan in Florida is just the beginning of the financing process. Your vigilance in following the steps may increase your chances of pre-approval.

Once you have a formal pre-approval document in hand, you can use it to your advantage as you negotiate with the seller of the property you wish to buy.

The process

Getting pre-approved depends on a lot of factors including the following:

  • Your income
  • Your credit score
  • Your employment history
  • Your debt-to-income ratio

According to Zillow, generally, a lender will analyze your financial history and credit history. They will make note of the price of the property for sale, the closing costs and any third-party costs. They will account for the amount of money you have for a down payment. From here, they will determine how much you can reasonably afford to spend on a home. If they grant pre-approval, they will send you a formal letter that reflects their findings.

The benefit

While pre-approval does not guarantee a home loan, it can improve your chances of getting one. Another benefit is that it can simplify your home-buying process and save you time and money along the way. You may also notice an increase in your credit score, as well as reduce your risks of real estate scams.

When you reach the negotiation part of the home-buying process, you can use your pre-approval to bypass a seller’s concerns about your ability to afford the payment. This may work to your advantage especially if other interested buyers lack proof of their financial stability.