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Why A Pre-Approval Is Key For Home Buyers

You may wonder why it is important to get pre-approved for a mortgage at the beginning of the home buying process, what that means, and why is it so important?

In today’s market, with rising home prices and high buyer competition, it is crucial to have a pre-approval letter prior to making an offer. Here’s why.

  1. Being competitive is an absolute must when buying a home in 2022. A pre-approval from a lender is the only way to know your true price range and how much money you can borrow for your loan. Another critical reason is being able to present a pre-approval letter that shows sellers you are a qualified buyer, something that can really help you land your dream home in an ultra-competitive market.
  2. 2022 is projected to stay a strong Seller’s market which means there are many more buyers active in the market than there are sellers and that is creating some serious competition. According to the National Association of Realtors (NAR), homes today are receiving an average of 3.8 offers for sellers to consider. As a result, bidding wars are still common. Pre-approval gives you an advantage if you get into a multiple-offer scenario, and these days, it’s likely you will. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war.

Freddie Mac explains:

“By having a pre-approval letter from your lender, you’re telling the seller that you’re a serious buyer, and you’ve been pre-approved for a mortgage by your lender for a specific dollar amount. In a true bidding war, your offer will likely get dropped if you don’t already have one.”

  1. Every step you can take to gain an advantage as a buyer is crucial when today’s market is constantly changing. Interest rates are rising, prices are going up, and lending institutions are regularly updating their standards. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals such as a loan officer and a trusted real estate advisor making sure you take the right steps and can show your qualifications as a buyer when you find a home to purchase.
  2. In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. Not only does being pre-approved bring clarity to your homebuying budget, but it shows sellers how serious you are about purchasing a home.

Are you ready to start the home buying process and want to know what’s available on the market check out homes for sale in Central Ohio here.

Are you ready to start the pre-approval process? Connect with a top-rated Central Ohio lender here.

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