The short answer is \u201cNo\u201d, you don\u2019t have to. Is it in your benefit to? Almost certainly.<\/p>\n\n\n\n
Pre-approval, and it\u2019s lesser cousin Pre-qualification, show your ability to afford a loan on a property. At a minimum, this could save you from wasted time looking at properties you can\u2019t afford to buy in the first place. But the best use is in showing your worthiness as a potential buyer. In a multiple-offer scenario, these can mean the difference between getting your offer accepted or losing out to another buyer.<\/p>\n\n\n\n
It all comes down to risk. A seller\u2019s primary goal is to sell their house. Unless they find a cash buyer, the new buyer will have a loan. This means that the new buyer will (or SHOULD!) have an addendum to their offer that makes the entire contract contingent on the buyer\u2019s ability to securely close on a loan from a bank. This protects the buyer from being stuck in a contract in the event that the loan falls through. It\u2019s essentially insurance for the buyer, but it comes at a cost. To a seller, this represents a potential risk. If the buyer fails to qualify for a loan, the contract becomes void, and the seller is left with the house and nothing to show for it other than a little option money.<\/p>\n\n\n\n
This is where pre qualification and pre approval come in. To a seller, you\u2019ve clearly done your homework and you represent lower risk. Pre-approval is much better than pre-qualification in terms of risk, but both can help you in a multiple offer scenario. Consider this\u2026 two offers come in on a house, both at the same price, only one of them is with a pre-approved buyer. Who would you go with?<\/p>\n\n\n\n
While pre-qualification and pre-approval are good for every purchaser, they are essential for investors. Real estate investing requires fast timing and competitive offers. Having a letter of pre-approval from your bank allows you to make an offer immediately upon finding a house. It also gives you an edge when competing against other pending buyers, and in some cases, that edge could allow your offer to be accepted even when it\u2019s lower than all others. Again, it all comes down to risk, so the better you can represent yourself as a buyer, the higher chance you have of getting the property.<\/p>\n","protected":false},"excerpt":{"rendered":"
The short answer is \u201cNo\u201d, you don\u2019t have to. Is it in your benefit to? Almost certainly. Pre-approval, and it\u2019s lesser cousin Pre-qualification, show your ability to afford a loan on a property. At a minimum, this could save you from wasted time looking at properties you can\u2019t afford to buy in the first place. But […]<\/p>\n","protected":false},"author":1,"featured_media":230194,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[37,36],"tags":[],"acf":[],"yoast_head":"\n