Stop Wondering What Your Budget Is & Get Pre-Approved!
In many markets across the country, the number of buyerssearching for their dream homes outnumbers the number of homes for sale. Thishas led to a competitive marketplace where buyers often need tostand out. One way to show that you are serious about buying yourdream home is to get pre-qualified or pre-approved for a mortgagebefore starting your search.
Even if you are not in an incredibly competitive market,understanding your budget will give you the confidence of knowingwhether or not your dream home is within your reach.
Freddie Mac lays out the advantages ofpre-approval in the ‘MyHome’ section of their website:
“It’s highly recommended that you work with yourlender to get pre-approved before you begin house hunting.Pre-approval will tell you how much home you can afford and canhelp you move faster, and with greater confidence, in competitivemarkets.”
One of the many advantages of workingwith a local real estate professional is that many haverelationships with lenders who will be able to help you throughthis process. Once you have selected a lender, you will need tofill out their loan application and provide them with importantinformation regarding “your credit, debt, workhistory, down payment and residential history.”
Freddie Mac describes the ‘4 Cs’ thathelp determine the amount you will be qualified to borrow:
- Capacity: Your current and future abilityto make your payments
- Capital or cash reserves: The money,savings, and investments you have that can be sold quickly forcash
- Collateral: The home, or type of home,that you would like to purchase
- Credit: Your history of paying bills andother debts on time
Getting pre-approved is one of many steps that will show homesellers that you are serious about buying, and it often helps speedup the process once your offer has been accepted.
Bottom Line
Many potential homebuyers overestimate the down payment andcredit scores necessary to qualify for a mortgage. If you areready and willing to buy, you may be pleasantly surprised at yourability to do so today.