In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get a pre-approval for a mortgage before starting your search.
Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.
Freddie Mac lays out the advantages of pre-approval in the My Home section of their website:
“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”
One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”
- 10 Things Your Competitors Can Teach You About Real Estate
- Why You Shouldn’t Take Your House Off the Market During the Holidays
- Existing Home Sales Surge Through The Holidays
- Homeowner’s Net Worth Is 45x Greater Than A Renter’s
- Top 5 Reasons You Should Not For Sale By Owner
- How To Prepare Your Home For Hurricane Season
- How Homeowners Celebrate This Hot, New Trend
- Time to File Florida Homestead Exemption!
- 6 Seemingly Innocent Habits That Are Hurting Your Health
- Are You Getting the Home Tax Deductions You’re Entitled To?
- What Would a Millennial Baby Boom Mean for Housing?
- 8 Questions to Ask Yourself to Help You Declutter
- Stop making excuses and clean up the clutter in your home!
- 5 Things Your Home Appraiser Wishes You Knew
- Are You 1 of the 59 Million Planning to Buy This Year?
- 3 Questions to Ask If You Want to Buy Your Dream Home
- The Truth About Homeowner Equity
- Schedule for Fertilizing Lawns
- Have You Saved Enough for Closing Costs?
Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:
- Capacity: Your current and future ability to make your payments
- Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
- Collateral: The home, or type of home, that you would like to purchase
- Credit: Your history of paying bills and other debts on time
Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.
Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.