What is the purpose of mortgage pre-approval?
So you would like to buy a house soon. Maybe you called a real estate broker and they asked you if you had a pre-authorization before they started a visit with you? Don’t take offense, it’s very common and quite normal, and even to your advantage, here’s why.
Pre-approval as an element of negotiation
Imagine that you have a house to sell; good news, two identical offers for purchase have been made on your house! One of the two potential buyers is pre-approved by the bank and the other is not yet pre-approved. Which of the two offers do you most want to accept? Obviously, you would prefer to accept the buyer’s offer that is pre-approved by the bank.
We cannot say that this is a crucial element in the negotiation, but pre-authorization certainly gives you more credibility as a buyer.
Pre-authorization allows you to lock in a rate
A pre-approval is also useful to lock in a mortgage rate. Generally, it is possible to lock in this rate for 3 to 4 months. What’s interesting about a locked in rate is that you are protected if rates rise, and if rates decrease, you are entitled to that rate decrease.… LIRE LA SUITE