Getting Pre-Approved Should Always Be Your First Step
In many markets across the country, the number of buyers searching for their dream homes is way more than the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you’re serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.
Even if you’re in a market that is not as competitive, understanding your budget will give you the confidence of knowing if your dream home is within your reach.
Freddie Mac lays out the advantages of pre-approval 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 advantages of working with a real estate pro (like me!) is that we generally have relationships with lenders who will be able to help you with this process. Once you’ve selected 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 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 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
Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you’re ready and willing to buy, you may be pleasantly surprised at your ability to get that home you’ve been dreaming about, so give me a call and let’s start strategizing about your home search!