If you plan to buy a home this year, you may have heard that obtaining pre-approval is a necessary step before embarking on your journey. But why is this the case? Is it still relevant in today's shifting market?

The truth is, getting a pre-approval letter from your lender is critical, and when it comes to your home search, it can be a game changer in so many ways.

To better understand why, it’s important to know what pre-approval is. Freddie Mac defines the process like this:

“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. The lender you work with will provide you with a pre-approval letter, which is an official document that states the maximum amount they are willing to lend you, . . .”

Simply put, a lender's pre-approval helps you understand your true price range and how much money you can borrow for your loan. This can make it easier when you go house hunting. And knowing what you're approved for will come in handy when it comes time to make an offer on the home of your dreams.

Another added benefit is that pre-approval lets the seller know you’re qualified to buy their house. Paul Centopani, Editor for the Mortgage Reports, explains:

“. . . most sellers won’t even consider an offer unless the buyer is pre-approved at the right price point. Sellers and their agents want to know you’re ready and able to finance your offer amount. So you’ll want to have your preapproval teed up as soon as you’re serious about bidding on a home you like.”

Every advantage you can gain as a buyer is critical in a market that is constantly changing. You'll need help navigating these waters, so enlist the help of a team of professionals, such as a real estate advisor and a reputable lender. They'll make sure you're prepared to put your best foot forward.

Bottom Line

Getting pre-approved for a mortgage helps you better understand what you can borrow and shows sellers you’re serious about purchasing their home. Let’s connect so you have the tools you need to succeed as a homebuyer in today’s shifting market.