Pre-Approval in 2023: What You Need To Know

One of the first steps in buying a home is pre-approval. To understand why this is an important step, you need to understand what pre-approval is and what it means for you. Business Insider explains:

“In a preapproval [sic], the lender tells you which types of loans you may be eligible to take out, how much you may be approved to borrow, and what your rate could be.”

Essentially, pre-approvals provide important information about the home buying process. This will help you understand your options and understand what you can borrow.

how does that work? As part of the pre-approval process, the lender will review your finances to determine what they can lend you. From there, the lender will send you a pre-approval letter so you know how much you can borrow. This makes it easier when you go house hunting because you know your total. And with today’s rising mortgage rates hurting affordability for many buyers, it’s even more important to have a solid understanding of the numbers.

Pre-Approval Helps Show You’re a Serious Buyer

Another added benefit is that pre-approval shows that you are serious about buying a home, giving sellers confidence in your listing. The article states:

“From the seller’s perspective, a preapproval [sic] letter from a reputable local lender often can make the difference between accepting and rejecting an offer.”

This shows that while they may not face the fierce bidding wars they experienced when trying to buy during the pandemic, pre-approvals are still an important part of strong bidding.In fact, The Christy Bieber, personal finance writer for the Motley Fool, explains that this could be the most important part of the offer.

“Pre-approval maximizes the chances you’ll be able to actually close the deal – and sellers want to see that.The fact that a pre-approval gives you a better chance of getting your offer accepted is undoubtedly the most important reason to complete this step . . .”

Bottom Line

Pre-approval is an important first step in buying a home. Let the seller know what you can rent and show the seller that you’re serious about buying a home. Connect with local real estate experts and trusted lenders and get the tools you need to buy a home in today’s market.

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