If you’re planning to buy a home this year, one of the first steps on your journey is getting pre-approved. In today’s market when mortgage rates are higher than they were just a few months ago, getting a mortgage pre-approval can be a game changer. Here’s why.
What Is Pre-Approval?
A mortgage pre-approval is when a lender determines you are qualified for a home loan. Your pre-approval letter shows the maximum loan amount you are approved for as well as the specific interest rate and loan term you can expect.
As part of the pre-approval process, a lender will look at your finances to determine what they would be willing to loan you. Your lender will then give you a pre-approval letter to help you understand your true price range and how much money you can borrow. As a result, you will know your overall numbers. And with mortgage rates rising and impacting affordability, a solid understanding of your numbers is even more important.
Pre-Approval Can Signal You’re a Serious Buyer
Another benefit is that pre-approval lets the seller know you’re qualified to buy their house. Getting pre-approved can actually improve your chances of falling into the sellers’ good graces. You’ll want to get it done as early as you possibly can in the home-buying process.
Even though bidding wars are easing this year as the market shifts, pre-approval is still an important part of making a strong offer. It can help a seller feel more confident because it shows you’re serious about their home and that you’re a qualified buyer.
Bottom Line
Getting pre-approved for a mortgage is critical because it helps you better understand what you can borrow and shows sellers you’re serious about purchasing their home.
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