Hearing from a lot of sources that taking pre-approval is mandatory for a mortgage at the start of the home-buying process, you must have wondered as to its implications and meaning. You must have also wondered as to its importance, as to why is it so necessary in the first place. In today’s days and times, when the prices of homes are on the rise and the competition among buyers is at an all-time high, it is imperative to have a pre-approval letter before making an offer to buy any property. The reasons for this mandate are numerous. Here are a few of them listed below.
Knowing the True Price Range
It is of utmost importance that one is intentional and competitive when making an offer to buy any property this year. For this, Pre-approval from a money lender is the key, as it enables and helps you to know the actual price and value of the house and also enlightens you to the fact as to how much money you can borrow for your loan. It has an added benefit. When you present the pre-approval letter to the seller, it makes the impression on them that you are a qualified buyer, which in turn can prove to be very helpful in the realization of your dream home in today’s ultra-competitive and tough
market.
Acing the multi-offer scenario
The existing real estate market scene is such that there are many more buyers active in the market than the people who are willing to sell their properties. This has given rise to some serious competition. According to renowned home associations, today the homes are receiving an average of 3.8 offers for sellers to consider. Due to this spike in the want to buy homes, bidding wars are commonplace. Here pre-approval comes to your rescue, as in the case of a multi-offer scenario, it provides you with an edge over your competitors. Once a seller comes to know for sure that you have the capacity and are qualified to buy the property, you gain the upper hand in a possible and
potential bidding war. By being in possession of a pre-approval letter from the person who has loaned you the required amount, you are practically telling the seller that you are serious about buying their property and also that you’ve been pre-approved for a mortgage by your moneylender for a specific amount. In case of a bidding war, you have a better chance to win the offer if your opponent doesn’t have a pre-approval letter; as without it, his offer might be dropped.
Taking the Right Steps
In today’s scenario, where the market is in a constant state of change and fluctuation, your every smart move or step would help you in gaining an advantage as a buyer over your competitors. Everywhere there is a rise in the interest rates, there is a consistent hike in the prices, and the standards of the lending institutions are being updated regularly. In such a scene, any person would require guidance in order to navigate the choppy waters of the real estate market. Hence it is important to have a team of professionals, who are there to guide you regarding the dos and the don’ts. People such as a loan officer, a well-trusted real estate advisor help you and aid you in making absolutely sure that you take all the necessary steps required for the seamless transaction to take place. They are also helpful when it comes to showing your qualifications as a buyer when you discover a home that you wish to buy.
Bottom Line
When the market is as competitive as it is today and when the inventory of the properties to be sold is low, a pre-approval letter goes a long way in helping you buy the house of your dreams. Many times it can absolutely prove to be a game-changer in a tough scene, which is riddled with tough and close bidding for the same well-wanted property. This approval not only lets you have clarity regarding the budget which you require for buying a home but also shows and proves to the seller your seriousness and capability in buying the said property. Hence, it is the most important thing to keep in mind before planning on buying any house. It will surely make your dream house buying process a seamless, easy, and enjoyable one.
