Pre-Approval: The First Step in Buying
In most markets across the country, the number of buyers searching outnumbers the number of homes for sale. This trend creates a competitive marketplace where buyers need to stand out. One way for buyers to stand out and show that they are serious about buying is to get pre-qualified or pre-approved for a mortgage before starting the search for a home.
If the market you are searching in is not competitive, a pre-approval will be helpful in understanding your budget and what dream home you can afford. Pre-approval will help buyers to move faster and also with greater confidence.
Ask your PorchLight real estate professional about working with a trusted lender to help you through this process. With your lender, you will need to complete their loan application and provide them with information about your credit, debt, occupation history, and residential history.
There are four aspects that will determine the amount you will be qualified to borrow:
1) Capacity: Your current and future ability to make the payments
2) Capital: The money, savings, and investments you have that can be sold for cash.
3) Collateral: The home you would like to purchase
4) Credit: Your history of payments of bills and debts on time
Getting pre-approved is one step to show sellers that you are serious about buying. Pre-approval helps to speed up the buying process. Many buyers overestimate the down payment and credit scores needed to qualify for a mortgage. If you are ready and looking to buy, you may be surprised at your ability to do so.