Since the supply of homes for sale is growing and mortgage rates are coming down, you may be thinking it’s finally your moment to jump into the market. To make sure you’re ready, you need to get pre-approved for a mortgage.
That’s when a lender looks at your finances, including things like your W-2, tax returns, credit score, and bank statements, to figure out what they’re willing to loan you. After that process, you’ll get a pre-approval letter to show what you can borrow. Here are two reasons why this is essential in today’s market.
Pre-Approval Helps You Know Your Numbers
Although home affordability is gradually improving, it’s still a challenge for many buyers. Talking to a lender during the pre-approval process can help you understand your loan options and how fluctuating mortgage rates might affect your monthly payment. This step also provides clarity on your overall budget. As Investopedia explains:
Consulting with a lender and obtaining a pre-approval letter allows you to discuss loan options and budgeting with the lender; this step can clarify your total house-hunting budget and the monthly mortgage payment you can afford.”
Armed with this information, you can focus your search on Triangle area homes that fit your financial comfort zone. While slightly lower mortgage rates might allow you to stretch your budget, it’s essential to avoid overspending. CNET puts it perfectly:
In many cases, a lender may preapprove you for more than you need to spend on a home. And while it can be tempting to look at houses outside your budget, it won’t help you in the long run. Before you start touring homes, figure out how much you can realistically afford and stick to your budget.”
Pre-Approval Makes Your Offer More Appealing
When you find a home in Raleigh within your budget, pre-approval gives you a significant advantage. It not only strengthens your offer but also shows sellers you’ve already been through a detailed financial review. This can make you stand out as a serious buyer. Greg McBride, Chief Financial Analyst at Bankrate, emphasizes this point:
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.”
As mortgage rates continue to decline, more buyers are likely to reenter the market. While demand remains moderate, competition could increase, especially in sought-after areas. Pre-approval helps you put your best foot forward when you’re ready to make an offer.
Bottom Line
If buying a home in the Triangle area is on your agenda, getting pre-approved early on is a smart move. It clarifies what you can borrow and positions you as a serious buyer in the eyes of sellers. Contact Linda Craft Team Realtors to ensure you’re prepared every step of the way.