Get a Pre-Approval for Buying a House in a Hectic Market

Dated: August 27 2020

Views: 91

Why Is It so Important to Be Pre-Approved in the Homebuying Process?

Why Is It so Important to Be Pre-Approved in the Homebuying Process? | MyKCM

You may have heard that pre-approval is a great first step in the homebuying process. But why is it so important? When looking for a home, the temptation to fall in love with a house that’s outside your budget is very real. So, before you start shopping around, it’s helpful to know your price range, what you’re comfortable within a monthly mortgage payment, and ultimately how much money you can borrow for your loan. Pre-approval from a lender is the only way to do this.

According to a recent survey from realtor.com, many buyers are making the mistake of skipping the pre-approval step in the homebuying process:

“Of over 2,000 active home shoppers who plan to purchase a home in the next 12 months, only 52% obtained a pre-approval letter before beginning their home search, which means nearly half of home buyers are missing this crucial piece of paperwork.

This paperwork (the pre-approval letter) shows sellers you’re a qualified buyer, something that can really help you stand out from the crowd in the current ultra-competitive market.

How competitive is today’s market? Extremely – especially among buyers.

With limited inventory, there are many more buyers than sellers right now, and that’s fueling the competition. According to the National Association of Realtors (NAR), homes are receiving an average of 2.9 offers for sellers to negotiate, so bidding wars are heating up.

Pre-approval shows homeowners you’re a serious buyer. It helps you stand out from the crowd if you get into a multiple-offer scenario, and these days, it’s likely. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war and land the home of your dreams.

Danielle Hale, Chief Economist for realtor.com notes:

“For ‘a buyer in a competitive market, it’s typically essential to have pre-approval done in order to submit an offer, so getting it done before you even look at homes is a smart move that will enable a buyer to move fast to put an offer in on the right home.’”

In addition, today’s housing market is also changing from moment to moment. Interest rates are low, prices are going up, and lending institutions are regularly updating their standards. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals (a loan officer and a real estate agent) making sure you take the right steps along the way and can show your qualifications as a buyer at the time you find a home to purchase.

Bottom Line

In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. If you’re ready to buy this year, let’s connect before you start searching for a home.

Blog author image

Robin Muehlhauser - DRE#01460839

Specialties: Buyer's Agent, Listing Agent, Relocation, Consulting My team's passion is making your Real Estate goals a reality. We take the time to meet with our customers to understand their wants a....

Latest Blog Posts

The Current Real Estate Market Needs New Sellers

Homebuyer Demand Is Far Above Last Year’s PaceHomebuying has been on the rise over the past few months, with record-breaking sales powering through the market in June and July. Buyers are

Read More

What Effect will the 2020 Election Have on the Real Estate Market?

How Will the Presidential Election Impact Real Estate?The year 2020 will be remembered as one of the most challenging times of our lives. A worldwide pandemic, a recession causing historic

Read More

Get a Pre-Approval for Buying a House in a Hectic Market

Why Is It so Important to Be Pre-Approved in the Homebuying Process?You may have heard that pre-approval is a great first step in the homebuying process. But why is it so important? When

Read More

Why You Should Move to the Greater Sacramento Area

The Bay and Los Angeles are so expensive, yet they seem to get more and more crowded every day. You’re working from home anyway, and you’re planning on holding on to that when it’s

Read More