Erin Beck

(805) 708-0446

Karen Spechler

(805) 563-4074

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

  • September 7, 2020
  • Blog
  • 0
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 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, reach out to a local real estate professional (who can also connect you with a trusted lender) before you start searching for a home.

For information on buying or selling a home in Santa Barbara, contact South Coast Real Estate Experts Karen Spechler and Erin Beck.

Find out how much your home is worth: http://mysantabarbara.areahomevalues.net

By Keeping Current Matters

Related posts

  • Blog

Don’t Sell on Your Own Just Because It’s a Sellers’ Market

In a sellers’ market, some homeowners might be tempted to try to sell their house on their own...

Continue reading
  • Blog

What Is the #1 Financial Benefit of Homeownership?

There are many financial and non-financial benefits of homeownership, and the greatest financial...

Continue reading
  • Blog

What It Means To Be in a Sellers’ Market

If you’ve given even a casual thought to selling your house in the near future, this is the time...

Continue reading

Subscribe to our newsletter

Sign-up to get the latest news straight to your inbox.
SUBSCRIBE!
Give it a try, you can unsubscribe anytime.