In the world of real estate, securing a mortgage is a crucial step towards homeownership. However, not all mortgage approvals are created equal. There are three distinct levels of approval from a lender: pre-qualification, pre-approval, and fully approved. In this blog post, we’ll explore why getting fully approved for a mortgage is not just a wise choice but a game-changer in today’s competitive real estate market.
1. Pre-Qualification: A Shaky Foundation
Many homebuyers start their journey with a pre-qualification, often offered by lenders with minimal information requirements. While it can provide a rough estimate of how much you might be able to borrow, a pre-qualification falls short when it comes to protecting buyers. This is especially true in states like North Carolina, where buyers can be at risk of losing their non-refundable due diligence fee.
The issue with pre-qualification is that it lacks depth. Lenders typically base their calculations on basic financial information provided by the buyer, without diving into the details. As a result, it’s not a reliable indicator of a buyer’s actual financial capabilities or whether they are truly qualified to purchase a home. Relying solely on pre-qualification can lead to disappointment and financial loss if a buyer’s offer is accepted and then later falls through due to inadequate financing.
2. Pre-Approval: A Step Towards Confidence
Pre-approval is a more comprehensive process than a pre-qualification. Here, lenders collect and verify a buyer’s financial information, including credit history, income, and debt. This additional scrutiny gives both the buyer and seller more confidence that the buyer can afford the home and that the transaction is more likely to close successfully.
In competitive real estate markets, having a pre-approval in hand can make your offer more attractive to sellers. It signals that you are a serious and financially prepared buyer, increasing your chances of winning the bid. However, it’s important to note that pre-approval is not the final stage of approval.
3. Fully Approved: The Gold Standard
When it comes to ensuring a seamless and successful home purchase, a full approval from a lender is the gold standard. A fully approved buyer has gone through the entire underwriting process, leaving no doubts about their financial capability. This level of approval is the closest thing to having cash in hand and allows buyers to potentially close in as little as two weeks.
In highly competitive real estate markets, the ability to close quickly is a game-changer. Sellers often prefer buyers who can complete the transaction swiftly, as it reduces uncertainty and the risk of the deal falling through. Being fully approved can make you as competitive as cash buyers, which is a significant advantage in a market where properties may receive multiple offers.
As the leader running an elite real estate team, I prioritize offering high-end, concierge service to my clients. One way I ensure my buyer’s success is by requiring them to get fully approved for a mortgage. This not only protects their interests but also increases their chances of securing their dream home in a competitive market.
In conclusion, the importance of getting fully approved for a mortgage cannot be overstated. It not only safeguards the buyer’s interests but also makes them more competitive in today’s fast-paced and competitive real estate market. So, if you’re looking to purchase a home, make sure to go the extra mile and get fully approved – it might just be the key to winning the house of your dreams.
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