If you are buying a home in Midland, you should have preapproval from a lender before you start your search. But is it really necessary? This guide explains.
Do You Need Preapproval Before You Make an Offer?
Getting a preapproval letter from a lender is an important part of the home search. A preapproval letter lets you know what price range you should be looking in, as well as serves as something you can show to a seller to encourage them to accept your offer. But what, exactly, is preapproval – and is it really necessary?
What is a Preapproval Letter?
A preapproval letter is a document from a lender saying that as long as your financial situation doesn’t change much, the lender is willing to let you borrow the cash to purchase a home.
Preapproval is different from prequalification. Lots of people receive flyers and postcards in the mail that say “You’re prequalified!” – and those documents don’t mean much because there are no credit checks or employment verifications involved. Those come from lenders who want people to use their institutions, and they’re really invitations to apply.
On the other side of the coin, preapproval requires a credit check, employment verification, and even recent bank statements. It’s a lot like applying for a loan; you have to provide all kinds of documentation in order for a lender to preapprove you.
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Can You See Homes Without a Preapproval Letter?
You are absolutely allowed to look at homes without a preapproval letter. However, many real estate agents would prefer to show homes to people who do have preapproval letters. That’s because preapproval letters make a seller more likely to accept an offer (should you make one).
What Are the Benefits of Having a Preapproval Letter?
In addition to helping you determine how much money you could borrow from a lender in the event that you decided to purchase a home, having a preapproval letter can help you get an offer accepted.
Related: Is a home appraisal important?
How Can a Preapproval Letter Encourage a Seller to Accept Your Offer?
When you make an offer, you’re asking a seller to take their home off the market so you can buy it – and nobody else can. However, sellers are reluctant to put all their eggs in one basket, so to speak, unless they’re pretty sure that you’ll follow through with the deal. That’s where your preapproval letter comes in. You have a document from a lender saying that as long as your financial situation stays about the same, the lender will allow you to borrow enough money to purchase the home.
Are You Buying or Selling a Home in Midland, Texas?
Use our site to search homes for sale in Midland and all of our surrounding areas. Unlike the “big name” sites out there, our site is directly connected to our local MLS and is updated faster. By creating a property manager account you can stay on top of the newest homes for sale and get price change alerts so you can stay ahead of other buyers and beat them to the best deals!
In the meantime, check out these 1-click searches:
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