The market has been HOT lately. It’s been a great time for sellers in the area and if you have been debating whether or not now was the right time, believe us when we say it is.
For buyers, however, this causes a change in what it means for you. Since right now it is leaning more towards a seller’s market, buyers need to ensure that they have all of their ducks in a row. One major key to making sure that you will be able to swoop in and go all-in for your dream home is by getting pre-approved for a home loan. Getting pre-approved is not only the first step you should take but also the most important step in the home-buying process. Here’s why:
1. It shows that you are a serious buyer that can make a competitive offer. By taking the time to get pre-approved you will have an advantage over other potential buyers that didn’t take the time to do so. When you finally land on a home that is for you, the seller will take your bid seriously because they already can confirm you are financially fit. You have already been evaluated on your current finances which will give sellers more confidence in selling to you.
2. With a pre-approval, you will be given a good range and idea of how much you can borrow from your lender. This is a huge help in the home-buying process to know from the get-go as well. You won’t be wasting your time looking at homes that you ultimately cannot afford, or rather maybe you could go higher than you originally thought. By having a pre-approval letter, you will be able to make realistic decisions when it comes to the house hunting stage and staying within your price range.
3. Awareness and evaluation. Just because you go into a meeting and hand over all credentials in order to get pre-approved does not necessarily mean you will be right away. Sometimes there are red flags that lender’s will let you know need to change before they will be able to lend to you. Sometimes this means obtaining a higher credit score, improving your debt-to-income ratio or saving for a larger down payment. Whatever it may be, this is actually a huge saving grace before you even step foot into the home searching market. Knowing these things at the beginning will give you time to take care of them before you are ready to put an offer on a home - because if not, it will make for an unpleasant surprise when you put an offer on a home and potentially could get denied.
The process of getting pre-approved is very straight forward yet very crucial to potential home buyers. There are only benefits to taking this first step and in the end, will help you stand out among the growing crowd of home buyers. To prepare yourself to meeting with a lender, here are the typical things you will be asked to show or verify.
Proof of identity
Credit history
Employment history
Proof of income
Any assets you may have
Bank accounts
Any property you may own
Employer contact information
Your debts or liabilities still owed