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Why Pre-Approval Is Even More Important This Year

Starting your journey towards owning a Triangle area home? Then you’ve probably come across the term “pre-approval.” Let’s explore what it means and why it’s especially important for those looking to buy a home in 2024.

Understanding Pre-Approval

In the homebuying journey, your lender assesses your financial health to determine the loan amount you’re eligible for. This evaluation, as outlined by Investopedia, involves reviewing your W-2 forms, tax returns, credit score, bank statements, and more.

Following this assessment, you receive a pre-approval letter, which clarifies your borrowing capacity. Freddie Mac explains it as:

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. . . . Keep in mind 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.”

This advice is crucial. Even though it’s becoming a bit easier to afford a home, being smart with your finances is still essential. Knowing how much you can borrow helps you make savvy decisions about your homebuying budget. It means you can search for Raleigh houses that fit your financial comfort zone and act quickly when you find the one that feels like home.

The Importance of Pre-Approval in 2024

If you want to buy a home this year, there’s another reason you’re going to want to be sure you’re working with a trusted lender in Raleigh and the surrounding areas to make this a priority.

Although the inventory of Triangle area homes for sale is increasing, it remains below typical levels. Coupled with a recent dip in mortgage rates drawing more buyers, the housing market is experiencing a demand-supply mismatch, intensifying competition among buyers.

This competition highlights the value of pre-approval. It signals to sellers your serious intent and financial readiness, having passed a thorough credit and financial examination. Greg McBride, Chief Financial Analyst at Bankrate, emphasizes its significance:

Preapproval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements. A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”

For sellers, a pre-approved buyer is more appealing, promising a smoother transaction without unforeseen complications. In a competitive market, securing pre-approval can be a strategic advantage in securing your desired Triangle area home.

Bottom Line

For those looking to enter the housing market in 2024, securing pre-approval is more than a procedural step—it’s a strategic advantage. With the market dynamics favoring prepared buyers, obtaining pre-approval positions you to make compelling offers, distinguishing you in a competitive landscape. Ready to become a homeowner? Contact Linda Craft Team Realtors to get started.

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