In a great number of markets across the US, the quantity of Buyers intent on finding their dream home far outnumbers the amount of homes for sale. This lack of inventory has created a competitive marketplace where multiple offers on the same property is not an uncommon phenomenon. Quite the opposite is true!!
With that being said, Buyers need to be prepared, so that when their dream home hits the market, they are ready, willing and able to make their particular offer look as attractive as possible in the eyes of the Seller. This of course will enable them to get their offer in as quickly as possible and shine compared to any potential competing offers.
Without a doubt, the 1st step in the process of being prepared is to obtain a mortgage pre-approval letter, before starting your home search.
This is common industry practice and therefore Sellers will expect a pre-approval letter to accompany any and all offers they receive. Without one, they will have no way of knowing whether or not they are negotiating with a Buyer that can actually complete the sale.
Even if you are in a market that is not as competitive, knowing your budget upfront will give you the peace of mind that dream home is within your personal financial reach.
Freddie Mac states the advantages of a mortgage pre-approval letter in the My Home section of their website:
“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.”
One of the many perks of working with a competent local real estate professional is that they will have established relationships with lenders who will be able to help you through the loan process. Once you have selected a lender, you will need to complete their loan application, as well as 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
Without a doubt, getting pre-approved is the 1st step in being prepared to show the Seller that they are dealing with a serious Buyer and thereby make your dream home search a reality!!
The Takeaway
Unfortunately, many Buyers overestimate the amount of down payment they will require and the credit scores needed to qualify for a mortgage. If you are ready and willing to buy, you may be pleasantly surprised at what your personal financial situation might appear in today’s market.
Call or text me today at 727.755.3434 and I would be glad to talk with you about Making Your Dream of Buying a Home a Reality!!
