Thanks to the recent upturn in the economy, which has, in turn, created a situation in many markets across the nation in which there are more buyers than there are available properties. While this might be an ideal situation for sellers, the shortage of available homes can and often does lead to competition among buyers. If you want to be the winning buyer, you need to make sure you stand out from the crowd.
Getting Pre-Qualified Is Vital
Most professional realtors and lenders will tell you that the best way to show sellers you are serious, is to take the time to get prequalified for a mortgage. Knowing how much you have to spend and that you have been pre-approved for the loan lets buyers know you are serious about making a purchase.
Even if you are looking at homes in a market where there is little competition, you should still take the time to talk to a lender first. This way you have a much better idea of how much you can afford to spend on your new home before you start shopping. According to Fannie May, “It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much homeyou can afford and can help you move faster, and with greater confidence, in competitive markets.”
It Pays to Work with a Professional
One essentialthing you must dois work with a professional realtor. The reason for this is simple. Most real estate agents develop excellent relationships with a selection of lenders who are willing to help you go through the prequalification process. After talking to the various recommended lenders and choosing the one you plan to use, you must follow their application process. Typically, this includes providing information such as work history, income, current debt load, your credit rating,andresidential history.
According to Freddie Mac,there are four “Cs” lenders use to help determine the maximum amount they will lend you for your mortgage. These are:
- Credit– Your credit score and history or your history of paying your bills on time.
- Capacity– Your ability to afford our payments both now and in the future.
- Cash Reserves or Capital– All cash, savings, and any investments you can sell for fast cashas needed.
- Collateral– The value and condition of the home you plan to buy.
The Bottom Line
The bottom line is simple, if you want a seller to see you as being a serious buyer, the best thing you candois to take the time to get prequalified for a mortgage. In many cases,it will help speed up the entire process of searching for your dream home from start to finish and could be the one thing that makes your offer stand out from the rest. Talk to your real estate professional today; youmight find you can qualify for more house than you imagined and can be in your new home quickly.