Why Lender Pre-Approval is a must in a fast moving market
It is a seller’s market out there and there are multiple reasons to be pre-approved BEFORE you start your home search.
#1 You want to be searching in the right price range for your budget. Interest rates are at all time lows and you may be able to increase your buying power and open up your options. Having a solid idea of what you can afford is a must.
#2 Multiple offers are very common in today’s market and when a seller is considering all 10 offers in front of them the first thing they look for is the strength of an offer. If there is no pre-approval letter with the offer you can bet more times than not that offer will be thrown to the side and they will be considering the remaining offers. Seller’s want the best price with the lowest amount of risk.
#3 There are circumstances with lending that an average buyer may not be aware of. Did you know some lenders won’t finance properties over 40 acres, or with multiple homes on one property? Maybe you are moving here and starting a new job; check with the lender to make sure you don’t have to be at the job for a period of time before being able to buy a house. Every buyer has a unique situation and every lender has their own answer to the situation.
#4 Some seller’s require pre-approval letters prior to letting a buyer view a home. Why, you ask? Well, from the perspective of a seller it takes a lot of effort to prepare their home for a showing and they don’t want to waste their time. They also want to make sure the people walking through their home are “real buyers” and not just snooping. During our time of Covid, sellers are choosing to limit who enters the house and this is a good way to make sure the buyers are serious.
#5 The real estate market is very busy right now and real estate brokers are extremely busy. Sometimes they have to prioritize how they spend their time and it makes sense to start with the buyers that are pre-approved and ready to buy.
Pre-approval letters do usually have an expiration time on them so ask the lender how long it is good for. I hope you find this information helpful and happy house hunting.