The 2022 real estate market seems to be following a similar arc as the previous year. It’s still a seller’s market with low inventory. According to the NAR, sellers are receiving an average 3.8 offers to consider, making the market highly competitive for buyers. As a buyer in this climate, you need to do everything in your power to make your offer stand out.
If you are interested in purchasing a home this year, pre-approval if your first step toward preparing to purchase a home. Here’s a look at what pre-approval is and why it’s important.
What is pre-approval?
A pre-approval letter is a document that shows the amount a lender is willing to lend you. The lender will assess your income, assets, and credit score to determine what loans you are eligible for and what your interest rate will be. This is done before you have a certain home you are interested in buying. Pre-approval is an offer, not a commitment, and is good for 60-90 days.
Why is pre-approval important
Getting pre-approved is a great way to know how much you are able to borrow and what your mortgage payment will be. Once you know the amount you are able borrow, you will be able to set your budget and know which homes you should be looking at. Inventory is low right now, so you are competing against many other buyers while home shopping. Pre-approval makes you stand out and shows the seller that you are serious.
How to get pre-approved
To get pre-approved for a mortgage, your lender will take a comprehensive look at your finances. They will be reviewing your income, employment, assets, credit, and debt-to-income ratio. You will also be asked to provide various documentation to verify this information. Make sure you have your W-2’s, pay stubs, and bank statements ready to go. Once the necessary information is submitted, you should have your pre-approval letter within 3 business days.
In this highly competitive market, securing your pre-approval letter from a lender is the first step toward purchasing a home. It will help you determine your budget, know which homes to look at, and make you stand out to the seller. As your Realtor, I have a network of mortgage lenders who would be happy to help you get started toward pre-approval. Contact me today to be connected.