You may have heard that pre-approval is a great?first step?in the homebuying process. But why is it so important? When looking for a home, the temptation to fall in love with a house that?s outside your budget is very real. So, before you start shopping around, it?s helpful to know your price range, what you?re comfortable within a monthly mortgage payment, and ultimately how much money you can borrow for your loan. Pre-approval from a lender is the only way to do this.
According to a recent?survey?from?realtor.com,?many buyers are making the mistake of skipping the pre-approval step in the homebuying process:
?Of over 2,000 active home shoppers who plan to purchase a home in the next 12 months,?only 52% obtained a pre-approval letter before beginning their home search, which means nearly half of home buyers are?missing this crucial piece of paperwork.?
This paperwork (the pre-approval letter) shows sellers you?re a qualified buyer, something that 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?s fueling the competition. According to the?National Association of Realtors?(NAR), homes are receiving an average of?2.9 offers?for sellers to negotiate, so?bidding wars?are heating up.
Pre-approval shows homeowners you?re a serious buyer. It helps you stand out from the crowd if you get into a multiple-offer scenario, and these days, it?s likely. When a seller knows you?re qualified to buy the home, you?re in a better position to potentially win the bidding war and land the home of your dreams.
Danielle Hale, Chief Economist?for?realtor.com?notes:
?For ?a buyer in a competitive market, it?s?typically essential to have pre-approval done?in order to submit an offer, so getting it done before you even look at homes is a smart move that will enable a buyer to move fast to put an offer in on the right home.??
In addition, today?s housing market is also changing from moment to moment.?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 (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 competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. I have wonderful people who I work with in the mortgage industry who I can refer you to, so when it’s time to make an offer, the process will go much smoother, you’ll save some time, and you might get that deal you wouldn’t have won without it. Call me today at (210) 852-1676 or send me an email at firstname.lastname@example.org.