Loan Pre-approval is the First Step

The number of buyers looking to purchase homes outnumbers the number of available homes for sale.   It is a competitive real estate market.  As a buyer, you want to stand out.  A great way to show sellers you are serious about buying it to get pre-approved for a mortgage before starting your search.

Knowing what you qualify for will give you and your real estate agent a more accurate price point and will save time by only looking at homes within your price range.

Freddie Mac lays out the advantages of getting pre-approved:

“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.”

Freddie Mac describes the 4 Cs that help determine the amount you will qualify for:

1. Capacity: Your current and future ability to make your payments
2. Capital or cash reserves: The money, savings and liquid investments you have
3. Collateral: The home, or type of home, you would like to purchase
4. Credit: Your history of paying bills and other debts on time

Submitting a pre-approved letter from a lender with your offer, is something that shows sellers you are financially able to get to the closing table.  Most sellers will not even consider an offer without a lender letter.

Real Estate Bottom Line

Many buyers overestimate the down payment and credit scores required to qualify for a mortgage. If you are looking to buy a home, you may be pleasantly surprised once you talk with a lender.