Pre-approval for a mortgage is a necessity for home buyers who want their offer to buy to be taken seriously. Many buyers seek assistance from a real estate lawyer or real estate broker to better understand the Chicago home market and the need for mortgage pre-approval before making an offer on a home.
Buyers Who are Ready to Close the Deal Motivate Sellers
On average, 88.2 percent of mortgage applications are approved across the nation. The Illinois approval rate comes in slightly below the average at 87.6 percent.
For Chicago home sellers, that approval rate really means that 12.4 percent of mortgage applications are denied. Sellers are motivated by buyers who are ready and able to close the deal, and offers from pre-approved buyers go to the top of the pile.
Benefits of Mortgage Pre-Approval
Few things are more disappointing for home buyers than finding the perfect home, and then finding out they cannot qualify for the mortgage. Sellers usually are not inclined to wait while buyers search for mortgage alternatives.
Pre-Approval can overcome a seller’s concerns and avoid buyer disappointment by helping buyers understand what type of home they can afford, remove any questions about their ability to purchase, and motivate sellers to agree to an offer quickly.
Few buyers have the cash to buy a house outright. Mortgage pre-approval is the next best thing to cash.
Pre-approval Versus Pre-qualification
Buyers should keep in mind that getting pre-qualified is not the same as pre-approval for a mortgage. Pre-qualification is a review of a buyer’s possible ability to secure a mortgage based on verbal responses to a few questions. Generally, they are not taken seriously by sellers.
Pre-approval is a much more detailed process and includes:
- Credit score checks of all parties on the mortgage
- Income verification of all parties who will be responsible for paying the mortgage
- Review of the buyer’s current debt to income ration, with a lower ratio indicating a greater likelihood to be able to pay the mortgage
- Verification of all assets, including cash, bank accounts, stocks and retirement accounts
Increased Chances of Acceptance
Understanding the local real estate market and the need for mortgage pre-approval is essential to successfully purchasing a buyer’s dream home. Pre-approvals significantly increase the chances that a buyer’s offer will be accepted by a seller.
