You may have been told that it’s important to get pre-approved at the beginning of the homebuying process, but what does that really mean, and why is it so important? Especially in today’s market,
with rising home prices and high buyer competition, it’s crucial to
have a clear understanding of your budget so you stand out to sellers as
a serious homebuyer. Being intentional and competitive are musts when buying a home right
now. Pre-approval from a lender is the only way to know your true price range
and how much money you can borrow for your loan. Just as important,
being able to present a pre-approval letter shows sellers you’re a
qualified buyer, something that can really help you land your dream home
in an ultra-competitive market. With limited housing inventory, there are many more buyers active in
the market than there are sellers, and that’s creating some serious
competition. According to the National Association of Realtors (NAR), homes are receiving an average of 5.1 offers
for sellers to consider. As a result, bidding wars are more and more
common. Pre-approval gives you an advantage if you get into a
multiple-offer scenario, and these days, it’s likely you will. When a
seller knows you’re qualified to buy the home, you’re in a better
position to potentially win the bidding war. Freddie Mac explains: “By having a pre-approval letter from
your lender, you’re telling the seller that you’re a serious buyer, and
you’ve been pre-approved for a mortgage by your lender for a specific
dollar amount. In a true bidding war, your offer will likely get dropped
if you don’t already have one.” Every step you can take to gain an advantage as a buyer is crucial when today’s market is constantly changing.
Interest rates are low, prices are going up, and lending institutions
are regularly updating their standards. You’re going to need guidance to
navigate these waters, so it’s important to have a team of
professionals such as a loan officer and a trusted real estate agent
making sure you take the right steps and can show your qualifications as
a buyer when you find a home to purchase. In a competitive market with low inventory, a pre-approval letter is a
game-changing piece of the homebuying process. Not only does being
pre-approved bring clarity to your homebuying budget, but it shows
sellers how serious you are about purchasing a home.Pre-Approval Makes All the Difference When Buying a Home
Bottom Line