Mortgage Advice

House Hunting? A Pre-Approval Could Make a Purchase more Viable

For the last several years, the lack of residential property inventory has been a plaguing issue with too few homes available on the market for too many active buyers. This phenomenon, coupled with historically low interest rates, has driven contract prices higher, often above the (asking) list price of the subject unit. Those searching for a home today will find themselves competing with multiple offers and having to distinguish themselves.

As a buyer in this highly competitive market, what can you do to make your proposal more attractive than your opposition?

While “cash is king,” most prospective buyers lack enough of it to waive financing, so most buyers are in need of a mortgage. One of the most compelling answers that is often overlooked is to obtain a pre-approval.

Where a pre-qualification is basic and can sometimes be unauthenticated, a genuine pre-approval mandates that all relevant evidence of income and credit must be present and validated at the time of application. This data is processed and underwritten by mortgage operations professionals who produce a Mortgage Commitment. By contrast, on a standard pre-qualification, the income and asset documentation and even the credit report can be lacking. The absence of paperwork to authenticate a pre-qualification can sometimes result in a transaction that cannot be completed.

A pre-approval typically stipulates that the mortgage commitment is subject to an executed Agreement of Sale, satisfactory appraisal, proof of sufficient assets, and clear title report as well as some additional conditions, as applicable. The pre-approval is a credit commitment that eliminates the speculation of qualifying. The seller and listing agent can be certain that the buyer is both serious and viable. With a pre-approval, the mortgage applicant and their realtor representative can proceed into residential real estate offers with confidence.

An added benefit to the pre-approval is speed which in this market presents another competitive edge.  Since the credit package has already been cleared, half of the application has been processed even before a property is committed to contract. A buyer with a pre-approval can thereby negotiate a quicker closing date than that of their borrowing competitors which appeals to sellers in this tight market.

Univest offers pre-approvals as a free service. Securing a pre-approval can help facilitate a more appealing offer and differentiate you from the competition in this red-hot sellers’ market. For more information, contact Univest Home Loans at 877-723-5571.

 

Univest Bank and Trust Co. is an  Equal Housing Lender. NMLS #415882


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