Why A Pre-Approval Is Important
Most people know that the first step in the home-buying process is getting pre-approved for a loan. However, knowing the reason why is equally important. As you begin visiting homes, usually starting the process on-line, it's very easy to find your perfect dream home - except, that it's outside of your budget. So, to guard against this very real temptation, it's absolutely imperative to know upfront, before browsing homes on line and in person, exactly how much of a house (or condo) you can afford to buy. You will need to know how much per month you are comfortable paying on mortgage payments, and more importantly, how much of a loan you will qualify for. A pre-approval from a lending institution is the best way to go about this.
Realtor.com recently released a survey showing many home-buyers are skipping this step before looking at homes for sale.
“Of over 2,000 active home shoppers who plan to purchase a home in the next 12 months, only 52% obtained a pre-approval letter before beginning their home search, which means nearly half of home buyers are missing this crucial piece of paperwork.”
The pre-approval letter is written confirmation to sellers that you are qualified to purchase their home. This will most certainly help you stand out in a competitive market where other buyers have skipped this step. Most real estate agents will require a pre-approval prior to showing you homes as well.
Today's real estate market is very competitive - especially among buyers.
As many markets across the country, and we are experiencing it in many neighborhoods here in South Florida as well, there is limited inventory of properties for sale and more buyers in the market then there are sellers. In a report out from the National Association of Realtors® (NAR), on average, home sellers are receiving 2.9 offers to negotiate which means we are beginning to see bidding wars heat up.
Having a pre-approval submitted with your offer, helps you stand out from the crowd and shows the seller that you are a serious buyer and are qualified to purchase their home.
The Chief Economist for NAR, Daniel Hale explains:
“For ‘a buyer in a competitive market, it’s typically essential to have pre-approval done in order to submit an offer, so getting it done before you even look at homes is a smart move that will enable a buyer to move fast to put an offer in on the right home."
It's also important to understand that today's real estate market changes daily. We are experiencing historic low interest rates while home prices are rising, and lenders are constantly changing their lending guidelines. To ensure a smooth home-buying process, you will want to arm yourself with the best team of professionals to guide you along the path to a successful purchase.
As we navigate thru a highly competitive real estate market with ultra low inventory, a pre-approval letter is a significant must have in your tool box. When you're ready to begin the home-buying process, let's connect and get your pre-approved within minutes!
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. John Sabia, Coldwell Banker and Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. John Sabia, Coldwell Banker and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.