Across the country right now, the number of buyers seeking homes out numbers the number of homes available. Because of this, the housing market is super competitive and buyers often need to do something to stand out. One way to show that you are serious about buying your dream home is to get pre-approved for a mortgage before starting your search. Even in a less competitive market, knowing your budget will give you security of knowing if a home is within your reach. List Prices Hit a New High, Inventory Shortages Abound
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 chosen a lender, you will need to fill out their loan application and provide them with vital information regarding your credit, debt, work history, down payment and residential history.
There are 4 Cs that aid in determining the amount you will be approved to borrow:
- Capacity: Your current and future ability to make 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 want to purchase.
- Credit: Your history of paying bills and other debts on time.
Getting pre-approved not only shows sellers you are serious, but also speeds up the process of completing the purchase once your offer has been accepted. 5 Myths About Credit Scores For First-Time Home Buyers
Many people overestimate the down-payment and credit scores needed to get approved for a mortgage. If you are ready to buy, you may find yourself pleasantly surprised at what you can afford!
Photo Credit: realtor.com