Why Is It So Important to Be Pre-Approved in the Homebuying Process?
You may have heard that pre-approval is a great first step in the homebuying process. I would say it’s not a great first step, but it’s a mandatory first step.
If you need a home loan to buy a home (meaning, you are not paying cash) you need to know how much of a house you can qualify to buy. It does not make sense to be looking at homes that cost $500,000 when you can obtain a loan for $350,000.
When looking for a home, the temptation to fall in love with a house that’s outside your budget is very real. So, before you start shopping around, it’s helpful to know your price range, and, as important, what you’re comfortable with in a monthly mortgage payment, and ultimately how much money you can borrow for your loan. The pre-approval from a lender is the only way to do this.
The pre-approval form in Arizona real estate shows sellers you’re a qualified buyer, something that can really help you stand out from the crowd in the current ultra-competitive market.
How competitive is today’s market? Extremely – especially among buyers.
With limited inventory, there are many more buyers than sellers right now, and that’s fueling the competition. According to the National Association of Realtors (NAR), homes are receiving multiple offers for sellers to negotiate, so bidding wars are a reality.
Pre-approval shows homeowners you’re a serious buyer. It helps you stand out from the crowd if you get into a multiple-offer scenario, and these days, it’s guaranteed.
In Arizona, as a real estate agent, we cannot submit your offer to buy the home without this pre-qualification form. We can’t even submit the offer.
In addition, when a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war and land the home of your dreams.
In addition, today’s housing market is also changing from moment to moment. Interest rates are low, 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 (myself and a loan officer) making sure you take the right steps along the way and can show your qualifications as a buyer at the time you find a home to purchase.
In today’s very tight market with low inventory, a pre-approval letter is absolutely mandatory. Let us help walk you through the process so you are ready to make that offer when we find the house that is right for you.
Part of this information was repurposed from an article on Keeping Current Matters