Understanding Mortgage Pre-Approval in New York
If home buyers always paid with their savings and cash, it’d be a while before anyone can afford a home! That’s why home loans or mortgages are the popular and practical choice for the everyday buyer in search of a home.
Central New York is filled with many property options that you could potentially call your home. While most people apply for a loan after finding the home they want to purchase, we strongly recommend that buyers who can get pre-approved for a mortgage do it before they search the market. Here’s why a mortgage pre-approval can make you a better buyer on the market.
Understanding Credit Score
For those who aren’t familiar with the term yet, your credit score is a rating that banks, lenders, and other organizations use to determine your creditworthiness and ability to pay. It’s important to know and understand your current credit score before applying for a loan.
Those with good credit scores have either no outstanding debt or have a history of paying their debts on time. Thus, lenders sees them as a low risk borrower with a high chance of repaying their loan, and they are given higher loan limits and/or lower interest rates.
On the other hand, those with bad credit scores are those with existing debts, have a history of late payments, and with a record of bankruptcy. Lenders are more hesitant to loan money because there’s a higher chance these individuals may not repay their loan, so they’re either given loans with higher interest rates or are rejected completely.
Setting Expectations
There are plenty of properties in Central New York, but a lot of them may not be within your price range. Even with a loan providing you with extra funds, there’s a limit to how much your lender can offer and how feasible you can repay your mortgage within a certain amount of time given your income.
When you check for pre-qualification, you’re only getting a ballpark figure. By applying for a pre-approval, you’re getting a much more accurate amount based on your income and credit score. This can help you narrow down your options, manage your expectations, and make it easier for you to choose which house to settle for.
Be Seen as a Serious Buyer
The NYC real estate market is currently saturated with buyers, which means sellers with in-demand property aren’t short of offers. One way to gain an edge over other buyers is to have a pre-approval.
As an example, imagine a bidding war where Buyer A offers $500,000 for a property while Buyer B offers $510,000. It’s clear the seller might be inclined to accept Buyer B’s offer under these circumstances. But let’s say that Buyer A has mortgage pre-approval – here’s where the seller might reconsider Buyer A’s offer.
Many homeowners are looking to sell their property as fast as possible. If they see that you are pre-approved for a mortgage, it means two things: first, you are serious about buying property; and second, you can afford to buy their home. In this case, the seller knows that Buyer A is a sure offer while Buyer B will still have to apply and be approved for a mortgage, which can take longer.
Reducing Delays
Real estate agents in New York recommend getting pre-approval because it can reduce the chance of delays. After you and a seller agree on a price, the deal must be closed within a certain number of days. During this time, all the closing costs must be paid, the necessary documents filed, and mortgage approved.
If you decide to apply for a mortgage after finding a house, there’s no guarantee how long the approval will take. The approval process can take between a couple of days to a week, depending on the lender. And if you are not pre-approved, there is a chance that your application may be declined, causing a delay in your closing.
Need a Pre-Approval? Talk to Us ASAP
At Procopio Team at Hunt Real Estate, we strongly recommend our clients get pre-approved for a mortgage before searching for property that meets their financial capacity. It narrows down your possible options, makes you a serious buyer on the market, and reduces the risk of delays compared to applying for a loan during the closing period.
Ready to get a letter of pre-approval to give you the edge in Central New York’s real estate market? Get in touch with us today to know more.