Why Pre-Approval Should Be at the Top of Your Homebuying To-Do List

According to Keeping Current Matters, the housing supply is growing, and mortgage rates are beginning to drop, making this an ideal time for many to consider entering the real estate market. However, before you start your home search, getting pre-approved for a mortgage is essential.

1. Pre-Approval Helps You Understand Your Budget

Though home affordability is showing signs of improvement, it’s important to consult with a lender. A pre-approval process will help you figure out how much you can borrow and clarify what your monthly mortgage payments would be. As Investopedia explains:

“Consulting with a lender and obtaining a pre-approval letter allows you to discuss loan options and budgeting with the lender; this step can clarify your total house-hunting budget and the monthly mortgage payment you can afford.”

This process ensures your home search is within your financial comfort zone. With mortgage rates recently decreasing, you may find you can afford more than expected, but it’s still crucial not to overextend yourself financially. As CNET notes:

“In many cases, a lender may preapprove you for more than you need to spend on a home... figure out how much you can realistically afford and stick to your budget.”

2. Pre-Approval Strengthens Your Offer

A pre-approval also makes your offer more appealing to sellers by demonstrating that you’ve already undergone a thorough financial review. As Greg McBride from Bankrate explains:

“Preapproval carries more weight because it means lenders have reviewed your pay stubs, tax returns, and bank statements. A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”

As mortgage rates decrease, more buyers will re-enter the market, potentially increasing competition. Being pre-approved can give you a crucial advantage.

Bottom Line

To set yourself up for success in today’s market, get pre-approved for a mortgage early in the process. It not only gives you a clear picture of your borrowing power but also makes your offer more competitive.

Contact Indigo Skye Group to learn more and start your homebuying journey today!


Source: Keepingcurrentmatters.com