Rise High Investor Weekly Video #24 Pre approval



Is a Pre-Approval a Good Idea?

Pre-approvals can be a valuable tool when planning your property purchase—but only in the right circumstances. Let’s dive into the pros and cons to help you decide whether a pre-approval is right for you.

The Benefits of a Pre-Approval

  1. Essential for Auctions: If you’re planning to buy at auction, a pre-approval is a must. Without it, you’re taking on a significant financial risk.
  2. Stronger Negotiating Power: A pre-approval shows sellers and agents you’re serious and financially prepared, which can make a difference in securing your dream property.
  3. Faster Settlement: With a pre-approval, part of the loan process is already completed, enabling shorter settlement timeframes—often a competitive advantage in negotiations.

Downsides of Pre-Approvals

Pre-approvals have their limitations. They typically expire in three months, so if you don’t find a property within that time, you’ll need to reapply, which could affect your credit score. Each application is recorded on your credit file, and too many inquiries can lower your score, potentially impacting your ability to borrow in the future.

It’s also important to remember that a pre-approval isn’t a guarantee. Banks can still decline your loan based on changes in your financial situation, property valuation, or their lending policies. Keep these factors in mind before applying.

When a Pre-Approval Makes Sense

You’re Auction-Ready: If you’re heading to auction, a pre-approval is essential.

You’re Serious About Buying: Only apply for a pre-approval if you’re committed to purchasing within the three-month timeframe.

You Want to Strengthen Negotiations: It can provide peace of mind and a competitive edge when negotiating with sellers.

A pre-approval can be a powerful tool—but only when used wisely. Avoid getting multiple pre-approvals or renewing them unnecessarily, as this can harm your credit score. Always consult your mortgage broker, who knows your circumstances best, to determine if a pre-approval is the right step for you.

Remember, preparation and strategy are key to navigating your property journey successfully!