In a competitive real estate market, it’s important to be prepared when making an offer. Here’s why pre-approval should be step 1, even before looking at homes in Roseburg OR.
Although the number home buyers in Roseburg has been outnumbering the number of homes for sale, there are things you can do to make your offer stand out. The first step is is to get pre-approved for a mortgage.
5 Benefits Of Pre-Approval
There are some benefits of being pre-approved for a mortgage. Besides showing the seller that you can actually get the money, it also gives you confidence. You’ll know with certainty that buying your dream home is actually possible.
- Affordability. A pre-approval letter will show you exactly how much home you can buy and save time. You won’t waste yours or your broker’s time looking at homes you just can’t afford.
- Compelling. In a seller’s market you might find that the seller has actually received more than just one offer on the home (multiple offer situation). Although it is not an ideal situation, a pre-approval will show the seller that a lender is already willing to finance the home you choose. It just might be the compelling piece that compels the seller to take your offer.
- Streamlines The Loan Process. In a busy real estate market, everything tends to bottle neck up. In fact, you might see appraisal times running 5 or 6 weeks out! Since the loan itself is a process, and the lender typically has a lot of work to do in advance, it just makes sense to be pre-approved. Once pre-approved, your lender will give you a list of required documents and verification needed to finalize the loan. Getting this done early will give you a better chance of a smooth, fast transaction. Do not make any changes to your finances that might upset your debt-to-income ratio or credit score before you close.
- Understanding Of The Costs. Buying a home is a huge investment, and there are costs associated with buying. Many buyers are unaware of lender costs, escrow fees, homeowners and mortgage insurance costs, etc. Although we can often times get the seller to pay some or all of the buyer’s closing costs, it is not a “given.” With your pre-approval letter, the lender will also prepare you with an itemized breakdown of the costs. Knowing the cost helps buyers make wise decisions and stay on budget in regards to repairs, renovations, updates, etc.
- Position In Negotiation. Being pre-approved shows the seller that you’re not just shopping around, but you’re serious about buying a home. You have actually taken the time to sit down with a lender and have the ability to buy. While there is no way to guarantee, we can usually get the seller to negotiate the price or pay some/all of the buyer’s closing costs if a pre-approval letter is attached.
4 C’s To Determine Pre-Approval
Freddie Mac refers to the 4 C’s that determine how much a buyer will qualify to borrow in Roseburg OR.
- Capacity – Your current and future ability to pay back the loan. Lenders look at your income, employment history, savings, and monthly debt payments, such as credit card charges and other financial obligations, to make sure that you have the means to take on a mortgage comfortably.
- Capital – The money and savings that you have on hand plus investments, properties, and other assets that could be sold fairly quickly for cash. Having these reserves proves that you can manage your money and have funds, in addition to your income, to help pay the debt.
- Collateral – The value of the home that you plan to buy.
- Credit – Your record of paying bills and other debts on time. (Even if you don’t plan to buy a home now, it’s always a good idea to build and maintain strong credit. Landlords often check it to make sure that you can pay the rent; it’s also important if you want to apply for a mortgage or other credit line in the future, such as a student loan, car loan, or credit card.)
Check It Out!
It’s surprising at how many potential home buyers think they need a huge down payment or a super high credit score to buy a home. I have helped many people in Roseburg purchase a home over the years who never thought, in a million years that they could actually become homeowners.
Here’s a recent article I wrote… 2 Myths About Home Buying That Discourages Wanna-Be Homeowners.
If you dream of home ownership, it’s worth checking it out. Need to know where to start? Just give me a call. Always here to help.