Stern Market Minute: Importance of Pre-Approval
Channel: The Stern Team | KW Salt Lake City Real Estate
Date: 2022-07-30

The real estate market has become increasingly competitive in recent months. With rising inflation and interest rates, the housing market has become a challenge for homebuyers. Deals are falling through at the fastest clip since 2020, making it crucial to have a pre-approval letter when shopping for a home. A pre-approval letter from a lender can make or break your home-buying experience. In this edition of the Stern Market Minute, we discuss the three key reasons why pre-approval letters are vital when shopping for a new home.

Gives You a Clear Picture of What You Can Afford:

One of the primary reasons to get a pre-approval letter is that it gives you a clear picture of what you can afford. Getting a pre-approval letter from a lender tells you the exact amount of money you can borrow from them. This, in turn, will help you determine your budget when shopping for a home. Keep in mind when searching for a home, it's not just the listing price you need to consider, but also the closing costs and other expenses. A pre-approval letter helps to ensure that you don't fall in love with a home you can't afford.

Makes the Home Buying Process Smooth:

A pre-approval letter can make the home-buying process seamless. When you're pre-approved, you have the advantage over other homebuyers who aren't pre-approved. You can close on a home quicker as the lender has already taken a preliminary look at your financial status. This also means that the seller knows you are a serious buyer and are ready to make an offer. Additionally, pre-approval letters are suitable for showing real estate agents that you're a serious buyer.

Provides Clarity and Transparency:

A pre-approval letter provides transparency to the seller. It signals to the seller that you're a prepared and financially qualified buyer. Sellers are more likely to choose a pre-approved offer because it provides them with clarity and transparency. It shows that you're committed to the transaction and have taken the time to prepare yourself financially to close the deal. Sellers may also worry about offers from bidders who haven't been pre-approved, as they are unsure if they can secure the financing necessary to close the deal.

In conclusion, a pre-approval letter can make or break your home-buying experience. It's essential to obtain a pre-approval letter before making any offers on homes. Aside from giving you a clear picture of what you can afford, a pre-approval letter makes the home-buying process smooth and provides clarity and transparency to the seller. With the real estate market becoming more competitive, it's essential to get pre-approved to ensure that you're prepared to navigate the market. So, if you're a home buyer looking for a new home, make sure to get pre-approved!

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Joshua Stern
The Stern Team
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