Real Estate

Pre-Approval Makes All the Difference When Buying a Home

You may have been told that getting pre-approved at the beginning of the home-buying process is important, but what does that mean, and why is it so important? Especially in today’s market, with rising home prices and high buyer competition, it’s crucial to have a clear understanding of your budget so you stand out to sellers as serious homebuyers.

Being intentional and competitive are musts when buying a home right now. Pre-approval from a lender is the only way to know your true price range and how much money you can borrow for your loan. Just as important, being able to present a pre-approval letter shows sellers you’re a qualified buyer, something that can help you land your dream home in an ultra-competitive market.

Despite the current market shift we are seeing, limited housing inventory still means that there are many more buyers active in the market than there are sellers, and competition for properly priced homes is still stiff.  Pre-approval gives you an advantage if you get into a multiple-offer scenario, and these days, it’s likely you will. When a seller knows you’re qualified to buy the home, you’re in a better position to win the bidding war potentially.

Freddie Mac explains:

“By having a pre-approval letter from your lender, you’re telling the seller that you’re a serious buyer, and you’ve been pre-approved for a mortgage by your lender for a specific dollar amount. In a true bidding war, your offer will likely get dropped if you don’t already have one.”

Every step you can take to gain an advantage as a buyer is crucial when today’s market is constantly changing. Interest rates are low, prices are going up, and lending institutions are regularly updating their standards. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals such as a loan officer and a trusted real estate agent making sure you take the right steps and can show your qualifications as a buyer when you find a home to purchase.

THE BOTTOM LINE

In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. Not only does being pre-approved bring clarity to your homebuying budget, but it shows sellers how serious you are about purchasing a home.

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ABOUT THE AUTHOR

Kevin Johnson

Kevin Johnson is the Chief Executive Officer and Managing Broker for the award-winning CENTURY 21 Edge and OneBlue Real Estate School. In his role as CEO, Kevin ensures that our organizations are defying mediocrity and delivering an extraordinary experience for our agents, students, and consumers. CENTURY 21 Edge currently has over 100 affiliated agents and two offices, Orlando and Pembroke Pines, Florida.
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