Why Getting Pre-Approved Should Be Your First Step

You first step in the home buying process should be to get pre-approved In our market, the number of buyers searching for their dream homes greatly outnumbers the number 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 pre-qualified or pre-approved for a mortgage before starting your search. Knowing your budget going into the process 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.” 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. Bottom Line 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. You know what you want but it may be more important to know what you can afford first. You may be surprised at your purchasing power! Call one of us, we’d be happy to put you in touch with the right lender to get you pre-approved.