In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get Buyer Credit Approved for a mortgage before starting your search.
Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach. You will feel confident knowing that you have a home loan and now just need to find the perfect home, making your homebuying experience much more peaceful for you
Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:
“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”
One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”
Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:
- Capacity: Your current and future ability to make your payments
- Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
- Collateral: The home, or type of home, that you would like to purchase
- Credit: Your history of paying bills and other debts on time
Getting Buyer Credit Approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted. Your offer will rise to the top and we have found that when our team makes proactive phone calls to Listing Agents for our clients’ offers, their offers are accepted with confidence, as they are not just Pre-Qualified or Pre-Approved…they are Buyer Credit Approved by underwriting, making their offer as strong as a cash offer.
Bottom Line
Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well. Contact your Lender to create your home-buying strategy.
Karen Jones is a Licensed Mortgage Loan Officer (NMLS 307015) serving Arizona and California. As a Banker of over 39 years, she is dedicated in ensuring that her clients are well educated and prepared for their new home purchase. Contact Home Loan Officer, Karen Jones when you are ready to learn more about your home loan financing options in Arizona or California.
