You may have heard that it is important to get pre-approved for a mortgage at the beginning of the homebuying process, but what does that really mean, and why is it so important? Especially in today’s market, with rising home prices and high buyer competition, it is crucial to have a pre-approval letter prior to making an offer. Here is why:
Being intentional and competitive are musts when buying a home this year. 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 are a qualified buyer, something that can really help you land your dream home in an ultra-competitive market.
With limited housing inventory, there are many more buyers active in the market than there are sellers, and that is creating some serious competition. According to the National Association of Realtors (NAR), homes today are receiving an average of 3.8 offers for sellers to consider. As a result, bidding wars are still common. Pre-approval gives you an advantage if you get into a multiple-offer scenario, and these days, it is likely you will. When a seller knows you are qualified to buy the home, you are in a better position to potentially win the bidding war.
Freddie Mac explains, “By having a pre-approval letter from your lender, you are telling the seller that you are a serious buyer, and you have 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 do not 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 rising, prices are going up, and lending institutions are regularly updating their standards. You are going to need guidance to navigate these waters, so it is important to have a team of professionals such as a loan officer and a trusted real estate advisor making sure you take the right steps and can show your qualifications as a buyer when you find a home to purchase.
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.
Connect with your Town & Country Realty broker today so you are prepared to reach your real estate goals. Call us today at 541-757-1781 in Corvallis and at 541-924-5616 in Albany to have one of our professional brokers answer your real estate questions. You will be glad you did!
Source: Keeping Current Matters. Disclaimer: The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Town & Country Realty does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Town & Country Realty will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.