If you’re looking to buy a home, one of the first steps you should take is to get pre-approved for a mortgage. Pre-approval is an important process because it gives you a better understanding of your financial situation and helps you determine what price range you should be shopping in. as Business Insider explains:
In a preapproval [sic], the lender tells you which types of loans you may be elgible to take out, how much you may be approved to borrow, and what your rate could be.”
Pre-approval is a critical part of the home buying process that gives you important information about your financing options and how much you may be able to borrow.
How does it work? Lenders will review your finances to determine how much they would be willing to loan you. Once they have this information, they will provide you with a pre-approval letter that outlines how much money you can borrow. This can make your home search easier because you will know your budget. With higher mortgage rates impacting affordability for many buyers today, it is even more important to have a clear understanding of your budget.
Pre-Approval Helps Show You’re a Serious Buyer
An additional advantage is that pre-approval can give the seller more assurance in your offer because it indicates that you are earnest about purchasing their property. As Forbes points out in a recent article:
From the seller’s perspective, a preapproval [sic] letter from a reputable local lender often can make the difference between accepting and rejecting an offer.”
It’s important to remember that even though the housing market has calmed down since the pandemic, pre-approval is still a crucial part of making a strong offer. Christy Bieber, Personal Finance Writer at The Motley Fool, explains that it might be the most important part of making an offer:
Pre-approval maximizes the chances you’ll be able to actually close the deal – and sellers want to see that.
The fact a pre-approval gives you a better chance of getting your offer accepted is undoubtedly the most important reason to complete this step…
Here’s What We Say…
Getting pre-approved is an important first step toward buying a home. It lets you know what you can borrow and shows sellers you’re serious about purchasing their home. Connect with a local real estate professional and a trusted lender so you have the tools you need to purchase a home in today’s market.
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