This time of year, if you want to buy a house, you have to be smart and competitive. Today, pre-approval is so important because of this. The only way to know your true price range and how much money you can borrow for your loan is to get pre-approval from a lender. Editor of The Mortgage Reports Peter Warden tells us:
"The lender will look into your finances and send you a letter letting you know how much you can borrow. This not only gives you a clear idea of how much you can spend on a house, but also lets sellers know you're ready to make an offer."
Why is that so important now? Today, there are many more people looking for homes than there are homes for sale, which means there is a lot of competition. The National Association of Realtors (NAR) says that the average home gets 4.8 offers when it goes on the market and sells. So, there are still a lot of bidding wars.
In these situations, your pre-approval gives you an advantage. That's because you know exactly how much you can borrow before you write your offer, and it lets the seller know you're qualified to buy their home. This makes both you and the seller feel good about what you have to offer. And that makes it more likely that you could win a bidding war.
As Warden puts it:
"Getting preapproved is also important for another reason. This is because there are way more buyers than homes on the market right now. If you want to win a bidding war, you need to be very ready. Right now, most sellers are getting more than one offer. And most won't even look at an offer if it doesn't come with a preapproval letter."
In a market that is always changing, every advantage you can get as a buyer is important. The interest rates on mortgages are going up, home prices are going up, and lending institutions are always changing their requirements. You'll need help to find your way through these waters, so it's important to have a loan officer and a trusted real estate advisor on your side. They'll help you get ready to show off your best side.
Bottom Line
Getting pre-approved for a mortgage helps you figure out what you can afford and shows sellers that you're serious about buying their home. Let's talk so you can get the tools you need to buy a home in the current market.
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