If you’re looking into buying a home in the spring market, chances are you’ve heard of a pre-approval letter. Before starting your home search, you should get pre-approved by a lender, who will let you know exactly how much you can spend.
To determine your maximum spending ability, lenders examine your finances, credit score, bank statements, W-2s, tax returns, and other financial information.
Pre-approval letters come with many benefits for buyers, especially in a low-inventory market. Let’s explore a few benefits below!
Stand Out Against The Competition
In the current market, two significant factors are coming into play for buyers.
- Even with more homes being listed, inventory is still below normal levels.
- Mortgage rates have recently started trending downward, attracting more buyers to look for homes.
Both of these factors are making it difficult for buyers to stand out, which is where having a pre-approval letter to submit with your offer can help. At the end of the day, all parties involved in a real estate transaction want to work with pre-approved buyers because it’s just extra reassurance that the deal will go smoothly.
Allow You To Move Fast
Knowing the terms of your loan and the maximum amount of money you can spend allows you to dial in your home search and avoid wasting time looking at homes you can’t afford. Once you find a home that meets your criteria, you can act quickly on it because you already know you can afford it.
In addition, pre-approvals allow you to have a fast track to closing. Since a majority of your financial information is already in the lender’s system, it can speed up the closing process and allow you to close quicker than buyers who aren’t approved.
Shows You Mean Business
Getting pre-approved is a thorough process that requires you to gather a lot of financial information for the lender. When submitted with the offer, it will show sellers you’re serious because you’ve already undergone a credit and financial check. Working with a lender also gives sellers an added level of security that the sale will move forward (hopefully with limited delays or issues).
The bottom line is that getting pre-approved really does not have any disadvantages, so you might as well work with a trusted lender to give yourself an advantage! If you need recommendations for local lenders or have questions about the homebuying process, reach out to us at 512.609-8098 or info@prismrp.com! We would love to share our expertise and answer any questions you might have.