The Power of Pre-Approval

If you’re buying a home this season, today’s housing market can feel like a challenge. With so few homes on the market right now, plus higher mortgage rates, it’s essential to have a firm grasp on your home buying budget. You’ll also need a sense of determination to find the right house and act quickly when you go to put in an offer. One thing you can do to help you prepare is to get pre-approved.

To understand why it’s such an important step, you need to know what a 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 homebuying 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 today, a solid understanding of your numbers is even more important.

Pre-Approval Helps Show You’re a Serious Buyer

That’s not the only thing a pre-approval can do. Another added benefit is it can help a seller feel more confident in your offer because it shows that your finances have been vetted and you are ready to go. With sellers seeing a slight increase in the number of offers again this spring, making a strong offer when you find the perfect house is key. Not to mention, many sellers require a copy of your pre-approval letter even before they allow their home to be shown. Sellers want to assume that they are opening their home to well qualified and serious buyers.

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 pre-approved help you zero in on the right price range, but it can give you a leg up on other buyers, too.”

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 are serious. Connect with your Colucci & Co. Realty team and a we can put you in touch with a trusted lender so you have the tools you need to purchase a home in today’s market.

This article was provided with content from Keeping Current Matters, Inc & Colucci & Co. Realty Group. The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions.