First Step to Buying a Home in 2019
In several markets across the US, and in Denver, the number of buyers looking for their dream homes can outnumber the number of homes for sale in the area. This has led to a competitive marketplace where buyers often need to stand out. One way to show that you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.
Even if you are not in a highly competitive market, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach.
The Importance of Pre-Approval
Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:
“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.” The best strategies come before you decide to buy a home. The first step would be to get any blemishes on your credit addressed. Pay down credit cards and other loans ahead of applying for your pre-approval.
One of the many advantages of working with Steve Jacobson is that he has close relationships with experienced lenders who will be able to help you through this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” They will look at what are called the 4 C’s of lending.
- Lenders consider the 4 Cs:
- Capacity – Your current and future ability to pay back the loan.
- Capital – The money and savings that you have on hand plus investments, properties, and other assets that could be sold fairly quickly for cash.
- Collateral – The value of the home that you plan to buy.
- Credit – Your record of paying bills and other debts on time.
Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.
What does this all mean?
Many potential homebuyers overestimate the down payment and credit scores necessary to qualify for a mortgage. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so today. Call me today with your application questions and we’ll get started with your journey to Dream Home Ownership!