How a pre-approved loan can help you compete when buying a home
When you decide to buy a home, if youâ€™re competing with other Buyers, a mortgage pre-approval makes your offer appear much stronger to the seller.
While many Buyers today might also have a pre-approval handy, you can use yours to win the bidding war by providing a financial statement along with a pre-approval letter from your lender with your offer.
If your pre-approval letter is for an amount above the asking price for the home, this will give the Sellers confidence in your ability to easily finalize the loan. You also can ask your lender to call the listing agent directly to emphasize your ability to close the deal.
Most real estate contracts include a contingency: the offer depends on the Buyer obtaining financing. If you have a strong pre-approval letter and feel your lender is dependable, you can remove the financing contingency, thus putting yourself in a better position to win over the seller.
Sellers are happy to see an offer without a financing contingency, because it proves the Buyer’s loan will close on time.
Note: Waiving this contingency can be risky. If your financing doesnâ€™t come through you could lose your deposit and even getÂ sued by the Seller.