Having confirmation of your preapproval for a mortgage at the start of the process can be critical in a competitive homebuying climate, with nearly 4 offers per home! Below is Freddie Mac’s argument for seeking preapproval in 2021, along with three other key reasons.
If you want to know how much you can borrow, your true price range for a home, you need preapproval. While that information is great for any homebuyer to have, its strongest value is as evidence to present to sellers. In a highly competitive market, being proactive and getting a lender preapproval letter can separate success from failure.
Freddie Mac: Get Preapproval in 2021
According to a report just released September 22 from the National Association of Realtors (NAR), the average home gets nearly four (4) offers. Thankfully, the average offer figure was down to 3.8 in August from 4.8 in July. However, unfortunately, the average number of per-home offers was higher year-over-year (rising from 3.2). Do not expect to be the only one bidding.
The best way to win in a multiple-offer situation is a preapproval letter.
The best way to win in a multiple-offer situation is a preapproval letter. Just take Freddie Mac’s word for it. Per the agency, “your offer will likely get dropped” if you don’t have a preapproval when you enter into a “true bidding war.” It is quite simply institutional financial backing for your bid. Sure, it tells the homeowner that “you’re a serious buyer”; but more importantly, they know that a lender will approve a mortgage “for a specific dollar amount.”
You will gain more flexibility to bargain with mortgage preapproval.
3 other reasons to get preapproval in 2021
A couple of other key reasons to get a mortgage preapproval letter NOW are negotiating power and speed of closing:
Knowing how much home you can buy – You don’t want to fall in love with a home that is out of your price range. Once you have preapproval, it gives you the ideal parameters for your home search.
Negotiating power – You will gain more flexibility to bargain with mortgage preapproval. Because the seller will be confident in your ability to buy, they may be willing to make compromises (such as completing a repair).
Fast closing – Closing will often take well over a month (50 days, on average, in 2019). Approval of the mortgage is one reason that closing is delayed. With preapproval, you can move seamlessly into appraisal and inspection.
Save money where it matters most in 2021
As you can see, mortgage preapproval is a very smart move in today’s market. Best Advantage Mortgage offers more than twelve years of industry experience and a 5.0 rating on Google (45 reviews). Meet our team!