If you’re in the market to buy a home, then you might have heard of the term pre-approval.

But what exactly does it mean to be pre-approved?

Simply put, pre-approval is a process by which you give the bank with whom you want to obtain a mortgage your personal information, financial information, and asset information. With this information, banks will be able to determine whether or not they can issue you a mortgage and up to what amount.

In other words, they will be able to pre-approve you for a certain amount with which you can buy a home. Therefore, you can go house hunting with a realistic price-range already in mind. 

While it’s not legally required for you to get pre-approved for a mortgage before shopping for a home, it is recommended. Let's explore three reasons why you should get pre-approved…

1. You can close faster

If you’ve already gone through the process of getting pre-approved, your bank (or the bank you got pre-approved for a mortgage with) already has all of the information they need about you. 

So when your offer is accepted, you have peace of mind knowing that your financing is taken care of and your bank can quickly issue the funds for the transaction.

1. It makes your offers way more attractive to sellers

In today’s hot market, having your financing lined up and ready to go is attractive to sellers. So why not put luck on your side?

1. You save the seller, the real estate agent, and your time

This one pretty much speaks for itself, but if you take the initiative to get pre-approved before you start shopping for a home, you will save everyone an enormous amount of time.

This is because you avoid a situation where you may be shopping for a home in a price range that you can’t afford or that your bank won’t be able to finance. 

All in all, getting pre-approved is the way to go if you want your home buying process to go smoothly. Have you ever shopped around without pre-approval? How did it go for you? Let us know!