Why Pre-Approval Should Be Your First Step

Pre-Approval Should be your First Step to Home Ownership

Pre-Approval Should be your First Step to Home Ownership

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. 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 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 local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will 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 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

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.

If you’re looking to buy, sell or lease a home; start with contacting your local Realtor® Joel Garza at Front Street Properties with Abundant Living Real Estate. Joel is a 5 star rated agent by clients with knowledge of Houston Heights, Montrose, Rice Military, River Oaks, MidTown and more. Visit FrontStreetProperties.com today and see how Joel can help with your real estate goals!