The Importance of Pre-Approval to Perspective Homebuyers
Anyone that is familiar with the real estate market in Grays Harbor fully understands that the number of buyers in the housing market far outnumbers the inventory of homes available. “The advantage tips to the seller in periods of low inventory,” says Oly Pen Real Estate Agent of the Month for January, Jessica Burgess. “because the supply creates a competitive environment.”
It is important to understand it the competition generated in seller’s markets can lead to multiple offer scenarios as well as bidding wars making it tough on home buyers. That is precisely why it is important to stand out from the crowd. That is also why real estate professionals including those it Oly Pen Recommend your home buying experience begin with pre-approval. Let's look at a few reasons why it is important.
Gain a Competitive Advantage
Low inventory, like we have today, means homebuyers need every advantage they can get to make a strong impression and close the deal. One of the best ways to get one step ahead of other buyers is to get pre-approved for a mortgage before you make an offer. For one, it shows the sellers you’re serious about buying a home, which is always a plus in your corner.
Accelerate the Homebuying Process
Pre-approval can also speed up the homebuying process, so you can move faster when you’re ready to make an offer. In a competitive arena like we have today, being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.
Know What You Can Borrow and Afford
Here’s the other thing: if you’re pre-approved, you also have a better sense of your budget, what you can afford, and ultimately how much you’re eligible to borrow for your mortgage. This way, you’re less apt to fall in love with a home that may be out of your reach.
Freddie Mac sets out the advantages of pre-approval:
“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.”
Local real estate professionals also have relationships with lenders who can help you through this process, so partnering with a trusted advisor will be key for that introduction. Once you select a lender, you’ll 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 also describes the ‘4 Cs’ that help determine the amount you’ll be qualified to borrow:
- Capacity: Your current and future ability to make your payments
- Capital or Cash Reserves: The easily accessible money, savings, and investments you establish
- Collateral: The home, or type of home, that you would like to purchase
- Credit: Your history of paying bills and other debts on time
While there are still many additional steps, you’ll need to take in the homebuying process, it’s clear why pre-approval is always the best place to begin. It’s your chance to gain the competitive edge you may need if you’re serious about owning a home. Why not give your Oly Pen Real Estate Team a call today at 360.249.8187 or stop by our office 141 S. Main Street in friendly Montesano, WA and discuss your expectations today!