Three Reasons Why Pre-Approval Is The First Step In The Process Of Buying A Home In 2020

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When the number of buyers in the housing market outnumbers the number of homes available for sale , it’s called a “seller’s market.” The advantage leans toward the seller as low inventory heats up the competition among those searching for a house to call their own. This can generate multiple offer scenarios and bidding wars, making it difficult for buyers to land their dream homes – unless they stand out from the crowd. Here are three reasons why pre-approval should be your first step in the home buying journey.

1. Gain a Competitive Edge

Low inventory, like we have today, means homebuyers need every advantage they can get to make a solid impression and close the deal. One of the best ways to get one step ahead of other buyers is to get pre-approved for a mortgage before you make an offer. For one, it shows the sellers that you are serious about buying a home, which is always a bonus in your corner.

2. Speed Up the Home Buying Process

Pre-approval can also accelerate the home buying process, so you can move quicker when you are ready to make an offer. In a competitive arena like we have today, being ready to put your best foot forward when the time comes may be the advantage you need to cross the finish line first, and land the home of your dreams.

3. Know What You Can Borrow and Afford

Here’s the other thing: if you are pre-approved, then you also have a better understanding of your budget. You will know what you can afford, and ultimately how much you are eligible to borrow for your mortgage. This way, you are less likely to fall in love with a home that may be out of your reach.

Freddie Mac sets 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.”

Local real estate professionals also have relationships with lenders who can help you through this process, so partnering with a trusted advisor will be key for that introduction. Once you choose 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 also describes the ‘4 Cs’ that help determine the amount you’ll be qualified to borrow:

Capacity: Your present 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 buy.

Credit: Your history of paying bills and other debts on time.

While there are still several additional steps that you will need to tackle in the home buying process, it’s clear why pre-approval is always the best place to begin. It is your chance to gain the competitive advantage you may need if you are serious about owning a home.

Bottom Line

Getting started with pre-approval is a great way to begin the home buying journey. Get together with a licensed real estate agent today to make sure you are on the fastest path to homeownership.

Please contact Tobie Andrews Real Estate Media for all of your residential and commercial photography needs. Photos, video, and drone. Let us help you! tobieandrewsre.com