Why Do Homebuyers Need Pre-Approval?

You may have heard that getting pre-approved for a mortgage is crucial at the start of the home-buying process, but what exactly does that imply and why is it so important? It’s critical to get a pre-approval letter before making an offer, especially in today’s market, with rising home prices and fierce buyer competition. This is why. 

When it comes to buying a property this year, being strategic and competitive are essential. The only way to discover your exact price range and how much money you can borrow for your loan is to get pre-approval from a lender. In an ultra-competitive market, being able to present a pre-approval letter tells sellers you’re a qualified buyer, which can truly help you land your ideal house. 

Due to the shortage of home inventory, there are far more buyers than sellers on the market, resulting in fierce competition.  

The National Association of Realtors (NAR) estimates that today’s homes receive an average of 3.8 offers for sellers to consider.  

Bidding wars are still widespread as a result.  

If you get into a multiple-offer situation, which is typical these days, pre-approval offers you an advantage.  

You’re in a stronger position to win the bidding war if the seller understands you’re qualified to buy the house. 

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.” 

When the market is continuously changing, every move you can take to get an advantage as a buyer is critical.  

Interest rates are rising, costs are increasing, and lending institutions are revising their rules on a regular basis.  

You’ll need help navigating these waters, so enlist the help of a team of pros, such as a loan officer and a trustworthy real estate advisor, to ensure you take the proper steps and can demonstrate your buyer qualifications when you discover a home to buy. 

In Conclusion. A pre-approval letter is a game-changing piece of the homebuying process in a competitive market with little inventory.  

Being pre-approved not only clarifies your homebuying budget, but it also informs sellers that you are serious about buying a house.