It is important to get pre-approved so you can be competitive in the marketplace. The most desirable homes to get listed in most markets are swept up buyers who know what they can afford. One of the best ways to show your commitment to buying a home is getting showing the seller you are ready to buy a home.
Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.
Freddie Mac states on 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.”
As Our office has grown we have made many professional relationships with lenders who can help guide you through the process. Once you have chosen your lender, you will fill out some paperwork and provide your mortgage lender with some financial information. This information is used to help calculate your purchasing power. This application selects important factor like Work History, Residential history, down payment and your credit information.
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
If you are considering to purchase a home maybe now is the time to get approved. Being Pre-Approved before you put an offer down on a home can speed up the process. Some sellers may not even consider your offer without a pre-approval letter.