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The Advantages of a Loan Preapproval

April 14, 2010 Leave a comment

One of the first steps to purchasing a home is getting preapproved for a loan. Often, most borrowers get prequalified for a loan, which is a good start. However, in order to establish yourself to Realtors as a serious and able buyer, you will need a preapproval letter from a lender.

With a preapproval letter in hand, a buyer is now in position to do the following:

1. Save time by looking at the right properties. A preapproval letter will set your price range, thereby saving you from wasting time looking at homes out of your price range. Nothing is more disappointing than finding a home you fall in love with, going to a lender to apply for a loan only to find that you qualify for less than what you hoped for. Now, not only is the house out of reach, but homes in the lower price range can seem disappointing in comparison.

2. Increase your negotiating power. A seller’s highest priority is selling their home fast. Homes are like bread, the longer they stay on the shelf, the less desirable they become. Nobody likes stale bread! A buyer that is preapproved is more of a sure bet to close the transaction. Preapproved buyers will always have priority over prequalified buyers!

3. Faster closing period. If you are preapproved, the transaction will not be tied up while the application is being processed. Appraisals can be ordered, and the ball can get moving right away, which can decrease a closing period from 30 days to a couple of weeks! Again, this might be even more advantageous if a seller is in a bind, and needs to close quickly.

Completing a loan application is usually the most time consuming part of the transaction. If you have already taken care of this step, you are only positioning yourself ahead of the pack! If you would like to see how much you are pre-approved for, feel free to call me at (562) 972-0351, or visit my website at www.AlissaAlvarez.com