You may have heard that pre-approval is a great first step in the homebuying process. But why is it so important? When looking for a home, the temptation to fall in love with a house that’s outside your budget is very real.
So, before you start shopping around for homes in Washington DC, Bethesda, Chevy Chase, or Northern Virginia, it’s helpful to know your price range, what you’re comfortable within a monthly mortgage payment, and ultimately how much money you can borrow for your loan. Pre-approval from a lender is the only way to do this.
According to a recent survey from Realtor.com, many buyers are making the mistake of skipping the pre-approval step in the homebuying process. In fact, only half obtained a pre-approval letter before beginning their home search, which means half are missing this crucial piece of paperwork.
This paperwork—the pre-approval letter—shows sellers you’re a qualified buyer, something that can really help you stand out from the crowd in the current market in Washington DC, Bethesda, Chevy Chase, NoVA, and beyond.
With limited inventory, there are many more buyers than sellers right now, and that’s fueling the competition. The latest Existing Home Sales Report from the National Association of Realtors (NAR) shows housing supply is still astonishingly low. Today, we have a 2.6-month supply of homes at the current sales pace.
As a buyer, to compete for that low number of homes, pre-approval shows homeowners you’re a serious buyer. It helps you stand out from the crowd if you find yourself in a multiple-offer scenario, and these days, it could happen. When a Metro DC seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war and land the home of your dreams.
Danielle Hale, Chief Economist for Realtor.com notes:
“It’s typically essential to have pre-approval done in order to submit an offer, so getting it done before you even look at homes is a smart move that will enable a buyer to move fast to put an offer in on the right home.”
In addition, today’s housing market is also changing from moment to moment. Interest rates are rising, while prices are beginning to cool, and lending institutions are regularly updating their standards. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals (a loan officer and a real estate agent) making sure you take the right steps along the way and can show your qualifications as a buyer at the time you find a home to purchase.
In today’s market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. If you’re ready to buy this year, do not hesitate to contact The Estridge Group before you start searching for a home and we can help recommend a local lender to assist with your pre-approval!