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In a competitive housing market, bidding wars are a sign that competition is fierce among potential buyers. While competition can be good news for sellers, for those looking to buy, it may cause dilemmas once it’s time to submit an offer. In fact, a recent survey by Redfin found that competition is a top concern for buyers, second only to affordability. Buyers know they must put their very best offer on the table, with aggressive timelines and as few contingencies as possible. So, how does a buyer who is financing their purchase improve their chances of getting an offer accepted?

Financing First
couple unpacking boxesA critical strategy to achieving success in a competitive market is to fully evaluate financing options before getting serious about the house hunt. A mortgage pre-approval may help the buyer clarify their budget and make it easier for a Realtor® to target properties that suit both the client’s lifestyle requirements and their financial restraints. In a traditional mortgage pre-approval (not to be confused with pre-qualification), a lender requests and verifies income and asset documentation from a borrower and completes a credit check.

Is a Pre-Approval Enough?
A pre-approval letter is a good start but is it enough to compete in a market where multiple or all cash offers are common? Maybe. But, what if it’s not? To create an option for buyers who want more of a competitive edge, RPM offers Advance Approval. The program enables a qualified buyer to get his or her loan approved before shopping for a house or getting into contract. Advance Approval shifts the real work to the initial stage of the mortgage process, when the stress of deadlines is far less.

Pre-Approval vs. Advance Approval
What’s the distinction between a pre-approval and an Advance Approval? Think of Advance Approval as an enhanced version of a pre-approval – with an important step added. An underwriter specifically evaluates the pre-approval to allow for up-front credit approval. When an Advance Approval buyer chooses a home to buy and goes into contract, the major requirements have already been addressed. Potentially, all that is left to facilitate full and final approval, are the appraisal, updates to the file and any last conditions. By nature, this process shifts a typical transaction’s timing. Customarily, the clock would start on the buyer’s loan approval at the same time the clock started on the close of escrow. But in the Advance Approval format, full approval can happen with fewer constraints and less stress caused by contractual timelines.

To evaluate your options for making a more competitive offer with Advance Approval, contact a loan advisor near you!

By Rob Spinosa