The Power of Pre-Approval

Anyone trying to purchase a home this year will know how challenging the housing market currently is. With low housing inventory and high mortgage rates, it is imperative to have a solid understanding on your homebuying budget. You will also need the motivation to find the right house and act quickly when you are ready to make an offer. One of the most important things you can do to prepare for this is to get pre-approved.

What is Pre-Approval?

First, let’s take a brief look at what pre-approval is. When you first start working with a lender, they will look at your finances to determine the amount they can loan you. From there, your lender may provide you with a pre-approval letter to help you determine how much money you can borrow.

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.”

The quote above is from Freddie Mac as they explain their take on pre-approval. Essentially, pre-approval can supply you with critical information about the homebuying process that will help you determine how much you can borrow so you have a better understanding of the options available to you. Considering the higher mortgage rates that are impacting affordability for many buyers today, having a strong understanding of your numbers is even more important.

Pre-Approval Helps Show You’re a Serious Buyer

Another important benefit of obtaining pre-approval is that it shows the seller that you are serious about buying their home. Any leg up you can get with a seller is imperative, as they are likely seeing many offers. So, having pre-approval gives the seller more confidence in you, and will give them more of a reason to choose your bid over all the others.

An article from the Wall Street Journal explains that:

If you plan to use a mortgage for your home purchase, preapproval should be among the first steps in your search process. Not only can getting preapproved help you zero in on the right price range, but it can give you a leg up on other buyers, too.”

In Conclusion

Getting pre-approved by your lender is an important step when it comes to buying a home. If you have questions about the pre-approval process and you’re not yet ready to talk to a leader, reach out to real estate professional Dianne Anderson today. She can help answer your questions and get you prepared to purchase a home in Southwest Florida.

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