If you’re planning to buy a home this year, you might have heard that pre-approval is a necessary step to take before starting out on your journey. But why is that? And is it still important in today’s shifting market?
The truth is, getting a pre-approval letter for a mortgage from a lender is critical, and when it comes to your home search in Rochester, NY, it can be a game changer in so many ways.
To better understand why, it’s important to know what pre-approval is. Freddie Mac defines the process like this:
“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home (or land). The lender you work with will provide you with a pre-approval letter for the home loan, which is an official document that states the maximum amount of money they are willing to lend you,…”
Put simply, pre-approval from a lender helps you understand your true budget and how much money you can borrow for your home loan. That can make it easier when you set out to search for homes. And since you’ll know what you’re approved for, it’ll also help once it’s time to submit an offer on the home of your dreams. Whether you offer your maximum amount on the pre-approval right off the bat or utilize an escalation clause. In layman’s terms, this will automatically raise your offer price by a pre-determined amount if another offer at the same or higher price is made by another buyer, up until a cutoff amount (that you set) is reached, which may be the maximum amount your pre-approved to borrow from a lender.
Another added benefit is that pre-approval lets the seller know you’re qualified to buy their house. Paul Centopani, Editor for the Mortgage Reports, explains:
“…most sellers won’t even consider an offer unless the buyer is pre-approved at the right price point. Sellers and their (real estate) agents want to know you’re ready and able to finance your offer amount. So you’ll want to have your pre-approval teed up as soon as you’re serious about bidding on a home you like.”
Every advantage you can gain as a buyer is crucial in the Rochester real estate market, which is constantly changing. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals, such as a licensed REALTOR® and trusted mortgage lender, on your side. They’ll help make sure you’re ready to put your best foot forward.
Getting pre-approved for a mortgage helps you better understand what you can borrow and shows sellers you’re serious about purchasing their home. We work with several local mortgage lenders that are very responsive, extremely knowledgeable, and well-versed in the local real estate market. While it may seem easy and tempting to just “hop online” and quickly apply for a mortgage pre-approval from the nationally advertised home loan companies, there are many advantages to working with a local lender that is familiar with housing trends in the local market. Let’s connect so you have the tools you need to succeed as a homebuyer in today’s shifting market.