How Important Is Getting Pre-Approved?
We have previously posted that pre-approval is a great first step in the homebuying process. But why is it so important? When you are looking for a home, the temptation to fall in love with a house that is outside your budget is very real. So, before you start shopping around, we recommend you know your price range, what you are comfortable paying monthly, and ultimately how much you can borrow for your loan. Getting a pre-approval letter from a lender is the only way to do this!
According to a recent survey from realtor.com, “…only 52% obtained a pre-approval letter before beginning their home search…”
This paperwork shows sellers you are a qualified buyer, something can really help you stand out from the crowd in the current ultra-competitive market. How competitive is today’s market? Extremely — especially among buyers! With limited inventory, there are many more buyers than sellers right now, and that is fueling the competition and causing bidding wars. Pre-approval shows homeowners you are a serious buyer. It help you stand out from the crowd if you get into a multiple-offer scenario — which is very likely. When a seller knows you are qualified to buy the home, you are in a better position to potentially win the bidding war and land the home of your dreams.
In addition, todays housing market is also changing from moment to moment. Interest rates are low, prices are going up, and lending institutions are constantly updating their standards. You are going to need guidance to navigate this process, so it is important to have a team of professionals (a loan officer and a real estate agent) making sure you take the right steps along the way and can show your qualifications as a buyer at the time you find a home to purchase.
In A Nutshell
In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. If you’re ready to buy this year, reach out a local real estate agent (who can also connect you with a trusted lender) before you start the home buying search.