Earnest money is a deposit that is submitted with your initial offer on a property. There is no required amount for an earnest deposit but a good rule of thumb is around 1% of your offered purchase price. The liability of the buyers putting down earnest money portrays to the sellers that you are serious about your contract. The earnest money will be held in an escrow account until the contract is fulfilled. If the contract is terminated, depending on the time and circumstance, you may or may not be eligible for the return of your earnest money. You should discuss this liability with your realtor before you submit any earnest money deposits.
Real estate agents and sellers will see you as a prepared and serious buyer. Knowing a lender has reviewed your financial ability and credit - puts you ahead of the rest when competing in a tough market.
Getting preapproved at the beginning of the house hunting process will allow you to stay within your budget and make the house hunting process more effecient.
Many sellers require a copy of the buyer's preapproval letter when the offer is initially submitted before considering it. If the preapproval is not available, the buyer may miss out on the opportunity and another offer may take precendence.
Having a solid preapproval in hand can give a buyer negotiating power when competing with other offers including cash offers and those that do not have thier preapproval ready yet.
Allowing your lender to preapprove you prior to entering into a contract and providing necessary documentation ahead of time can greatly speed up loan processing time and lead to a quicker and smoother closing.
