A lot of times when you're thinking of buying a home, the number of buyers searching far outnumbers the number of homes for sale. One way to show that you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. I insist on this being the case with my buyers. It does you no good to go look at homes, pick one and then try to get financing. Even if we're not in an incredibly competitive market, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach. I always say most of us would like to live on lobster but the reality is we have a chicken nugget budget.
Getting pre-approved or pre-qualified does two things:
- Sets your expectations and helps us know which homes to be looking for
- Puts you ahead of the game when you're ready to make an offer. Areddin offer with money in hand is much more appealing to the seller than an offer without pre-approval.
One of the many advantages of working with a local real estate professional is that we have relationships with lenders who will be able to help you through this process. We work with many great LOCAL lenders that can help. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:
Capacity: Your current and future ability to make your payments.
Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash.
Collateral: The home, or type of home, that you would like to purchase.
Credit: Your history of paying bills and other debts on time G
Bottom Line, getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted. Plus as of the writing of this blog, mortgage rates are at a one year low so if you are ready and willing to buy, you may be pleasantly surprised at what you can do!