Potential homebuyers are constantly encouraged receive pre-approval for home loans by lenders and financial experts. As a real estate agent, you should also be encouraging your clients to get approval for loans. When a client receives pre-approval for a loan, you both benefit.


Preapproval eliminates guesswork:

One of the most important benefits of a pre-approved loan is that your client knows exactly how much they have to spend on a home. Once you know how much they have been approved for, you can crunch numbers, factor in closing costs and your fees and give them a real, workable number.


Pre-approval means you will not waste time showing homes to clients who are unable to secure financing for their home purchase. As a real estate agent: your time is valuable. Clients with pre-approved financing should be your goal. They are much more likely to actually make a purchase and help you increase your bottom line.


One benefit of pre-approval is that you can safely assume that the buyer is serious about purchasing a home. Most people will not want to go through the arduous preapproval process if they do not intend to purchase a home.


Preapproval helps the process go faster:

Another benefit of having your clients seek preapproval is that the buying and selling process will go smoother and faster. It could be detrimental for your client, and you, if your make an offer on a home only to find out that the financing is not going to go through. The financing can be the most time consuming portion of home buying, taking care of the process upfront will help reduce the risk of losing a home to another bidder who has already been preapproved and it will eliminate some of the waiting game.


Preapproval has a time limit:

Remember to help your clients understand that their preapproval likely has a time limit. Most financial institutions place a limit of roughly 30 to 90 days, depending on the amount and other circumstances. If clients fail to find a home within the time limit they may have to provide all new information including pay stubs, tax history and a credit inquiry.


The difference between Preapproval and prequalification:

Preapproval and prequalified are not the same thing. Prequalification is more like a ballpark of what the bank could lend. The paperwork involved is minimal. In most cases, your client can even get a number over the phone.


Preapproval is a more in-depth process. The client will be required to submit paystubs and tax information in addition to providing information about assets. The lender or bank will then review the information and provide a letter of preapproval. This does not guarantee that your client will actually get that amount of money, but it does carry weight when the time for final approval comes.


Helping your clients understand the importance of a preapproval can make the home buying process much easier and faster for both you and your clients.