The number of buyers searching for their dream homes outnumbers the number of homes for sale. Many markets across the country are experiencing this. This has led to a competitive marketplace where buyers often need to stand out. Show that you are serious about buying your dream home. Before starting your search, try to get pre-qualified or pre-approved for a mortgage.
Understanding your budget will give you confidence. Even if you are not in an incredibly competitive market. You will know whether or not your dream home is within your reach.
Pre-Approval
“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.”
A local real estate professional has relationships with lenders who will be able to help you through this process. You will need to fill out a loan application. 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 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
One of many steps that will show home sellers that you are serious about buying. Once your offer is accepted, it will help speed up the process.
Bottom Line
Many potential homebuyers overestimate the down payment and credit scores necessary to qualify for a mortgage. You may be pleasantly surprised at your ability to do so today.