Pre-Approval Makes All the Difference When Buying a Home
You may have been told that getting pre-approved at the beginning of the home-buying process is important, but what does that mean, and why is it so important? Especially in today’s market, with rising home prices and high buyer competition, it’s crucial to understand your budget clearly. Hence, 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. As important, presenting a pre-approval letter shows sellers you’re a qualified buyer, which can help you land your dream home in an ultra-competitive market.
With limited housing inventory, many more buyers are active in the market than sellers, creating serious competition. According to the National Association of Realtors (NAR), homes receive 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 potentially in a better position to 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 rising, and lending institutions regularly update their standards. You’ll need guidance to navigate these waters. Hence, it’s important to have a team of professionals, such as a loan officer and a trusted real estate agent, to make sure you take the right steps and can show your qualifications as a buyer when you find a home to purchase.
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