The Influence of Pre-Approval

If you're looking to buy a house this spring, the current property market might be daunting. With so few properties on the market right now, as well as rising mortgage rates, having a strong handle on your homebuying budget is critical. You'll also need tenacity to identify the ideal property and move swiftly when it comes time to make an offer. Getting pre-approved is one thing you can do to help you prepare.

To understand why this is such a vital step, you must first grasp what pre-approval is. A lender will examine your finances as part of the procedure to decide how much money they are prepared to offer you. Your lender will then provide you with a pre-approval letter to assist you understand how much money you may borrow.

Freddie Mac explains it like this:

“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”

Pre-approval essentially provides you with vital information about the homebuying process that will assist you understand how much you may be able to borrow so you have a better understanding of your possibilities. And, with increasing mortgage rates affecting affordability for many buyers today, knowing your figures is even more crucial.

Pre-Approval Helps Show You’re a Serious Buyer

Pre-approval isn't the only thing it can do. Another advantage is that it makes the seller feel more secure in your offer because it indicates you're serious about purchasing their home. With sellers experiencing a little rise in the amount of bids this spring, making a solid offer when you locate the ideal property is critical.

As a recent article from the Wall Street Journal (WSJ) says:

“If you plan to use a mortgage for your home purchase, preapproval should be among the first steps in your search process. Not only can getting preapproved help you zero in on the right price range, but it can give you a leg up on other buyers, too.”

Bottom Line

Pre-approval isn't the only thing it can do. Another advantage is that it makes the seller feel more secure in your offer because it indicates you're serious about purchasing their home. With sellers experiencing a little rise in the amount of bids this spring, making a solid offer when you locate the ideal property is critical.