The housing market has been anything but normal for the last eleven years. In a normal real estate market, home prices appreciate 3.7% annually. Below, however, are the price swings since 2007
Why Is Getting Pre Approved Extremely Important
You do not want to start shopping for a home without having a clear budget in mind. Often, people are surprised, the overestimate or underestimate how much they can afford. With a pre approval, credit history, income, debt and employment history is reviewed to determine how much one can afford.
Once you are pre approved, you will be given a maximum budget. This will help guide you to the right listings because you will know how much exactly you can borrow and how much the monthly payment will be.
2- Shows You Are Serious
In this current market, we are experiencing record low inventory. You can almost guarantee if you see a hot property (especially investment properties) that it will have multiple bids and will go into a bidding war. You want your offer to stand out and shine. A pre approval letter showing that you were vetted by a lender who reviewed your credit history, income, debt and employment history. This will assure the seller that you are not wasting their time and it will be an easy transaction.
When the very best properties come on the market, they get snatched up very quickly, home buyers must do everything they can to position themselves as the buyer of choice.
3- Less Paperwork Down The Line
Between the contract signing, inspection, appraisal, title search, etc... the home buying process is a laborious task. The good news is getting the pre approved, will complete the most time consuming task which will make the rest of the process a lot smoother.
4- You Are not committed To Anything
If you do not the house of your dreams, do not worry, you won't be committed to a loan or working with any lenders.
5- Credit Score Won't Get Hurt
A mortgage credit pull is considered a soft pull andequals to approximatelyahandful ofpoints. Do not be nervous about the inquiry, the FICO score system is built with consumer protection in mind. You can apply for a mortgage with multiple lenders, the credit bureau will count it as a single credit inquire if it is within a 30 day period.
Do not confuse a Pre Approval with Pre Qualification
Some lenders might suggest that you get a “pre qualification,” but that is not as solid as a pre approval. With a pre approval, we’ll take a deeper look into your finances, with an in-depth analysis that gives a far more accurate vision of your creditworthiness.
Think of it this way: Qualifying for something is easy, but actually being approved for something is more challenging.