Buying a home in today’s competitive market can feel like a challenge. With so few homes on the market, plus higher mortgage rates, it’s essential to have a firm grasp on your home-buying budget. One thing you can do to prepare is to get pre-approved. Pre-approval will put you a step ahead once you find the right house and will give your offer a competitive advantage.
To understand why it’s such an important step, you need to know what pre-approval is. As part of the process, a lender looks at your finances to determine what they’d be willing to loan you. From there, your lender will give you a pre-approval letter to help you understand how much money you can borrow.
Freddie Mac explains it like this:
“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”
Basically, pre-approval gives you critical information about the home-buying process that’ll help you understand how much you may be able to borrow so you have a stronger grasp of your options. And with higher mortgage rates impacting affordability for many buyers, a solid understanding of your numbers is even more important.
Pre-Approval Helps Show You’re a Serious Buyer
Another added benefit of pre-approval is it can help a seller feel more confident in your offer because it shows you’re serious about buying their house. And, in a competitive marketplace, making a strong offer when you find the perfect house is essential.
As a recent article from the Wall Street Journal (WSJ) says:
“If you plan to use a mortgage for your home purchase, pre approval should be among the first steps in your search process. Not only can getting preapproved help you zero in on the right price range, but it can give you a leg up on other buyers, too.”
Bottom Line
Getting pre-approved is an important first step when you’re buying a home. It lets you know what you can borrow for your loan and shows sellers you’re serious. I have worked with many local lenders over the years and will be happy to make a recommendation based on your specific needs. Connect with me today to start the process.
