If you are considering buying a property in your area, like Chicago Gold Coast or Irving Park, pre-approval is a crucial part of the process you don’t want to skip. So, before you start picturing yourself in your new living room or dining on your future all-season patio, be sure you are working with a trusted lender to prioritize this essential step.
Here is why.
While home price growth is moderating and mortgage rates have recently come down, affordability is still tight. At the same time, there’s a limited number of homes for sale right now, which means ongoing competition among hopeful buyers.
But, if you are strategic, there are ways to navigate these waters – and pre-approval is the game changer.
What Pre-Approval Does for You?
You need to know more about pre-approval to understand why it’s important.
As part of the homebuying process, a lender looks at your finances to determine what they’re willing to loan you.
From there, your lender will give you a pre-approval letter to help you understand how much money you can borrow.
Freddie Mac explains it 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. . . . remember that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”
Getting pre-approved puts you in the mindset of seeing the bigger financial picture, one step at a time. And the key is more than just getting a pre-approval letter from your lender.
Combining pre-approval and strategic budgeting is your golden ticket to understanding what you can afford.
It saves you from painful heartaches down the road so you don’t fall in love with a house that might be out of reach.
Pre-Approval Helps Show Sellers You’re a Serious Buyer
But that is just the beginning.
Let’s face it: more people are looking to buy than homes available for sale, creating competition among homebuyers. That means you could see yourself in a multiple-offer scenario when you prepare to move.
However, getting pre-approved for a mortgage can help you stand out from other buyers!
In today’s fast-moving housing market, having that pre-approval in your back pocket can be your secret weapon. When sellers see you are pre-approved, it tells them you are a strategic and serious buyer.
In a world of multiple offers, that is a big deal!
As an article from the Wall Street Journal (WSJ) says:
“If you plan to use a mortgage for your home purchase, preapproval should be among the first steps in your search process. Not only can getting preapproved help you zero in on the right price range, but it can give you a leg up on other buyers, too.”
Pre-approval shows sellers you are more than just a window shopper.
You are a buyer who’s already undergone a credit and financial check, making the sale more likely to move forward without unexpected delays or issues.
Sellers love that because they see your offer as a reliable one.
A win-win, right?
Bottom Line
So, before you start mentally arranging furniture in your dream home, work with a trusted lender to get your pre-approval set. It will save you time, stress, and a lot of headaches that could come up along the way without it.
The reality is that the more prepared you are, the more likely you will land the home you long for.
Need a helping hand in your homebuying process? Schedule a free 30-minute call with Chicago’s best real estate agents!
