Close

Collins Community Credit Union

Why Pre-Approval Is Key for Homebuyers

You may have heard that it’s important to get pre-approved for a mortgage at the beginning of the homebuying process, but what does that really mean, and why is it so important? Especially in today’s market, with rising home prices and high buyer competition, it’s crucial to have a pre-approval letter prior to making an offer. Here’s why.

Published on Jan 25, 2022

You may have heard that it’s important to get pre-approved for a mortgage at the beginning of the homebuying process, but what does that really mean, and why is it so important? Especially in today’s market, with rising home prices and high buyer competition, it’s crucial to have a pre-approval letter prior to making an offer. Here’s why.

Being intentional and competitive are musts when buying a home this year. Pre-approval from a lender is the only way to know your true price range and how much money you can borrow for your loan. Just as important, being able to present a pre-approval letter shows sellers you’re a qualified buyer, something that can really help you land your dream home in an ultra-competitive market.

With limited housing inventory, there are many more buyers active in the market than there are sellers, and that’s creating some serious competition. According to the National Association of Realtors (NAR), homes today are receiving an average of 3.8 offers for sellers to consider. As a result, bidding wars are still common. Pre-approval gives you an advantage if you get into a multiple-offer scenario, and these days, it’s likely you will. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war.

Freddie Mac explains:
“By having a pre-approval letter from your lender, you’re telling the seller that you’re a serious buyer, and you’ve been pre-approved for a mortgage by your lender for a specific dollar amount. In a true bidding war, your offer will likely get dropped if you don’t already have one.”

Every step you can take to gain an advantage as a buyer is crucial when today’s market is constantly changing. Interest rates are rising, prices are going up, 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 such as a loan officer and a trusted real estate advisor making sure you take the right steps and can show your qualifications as a buyer when you find a home to purchase.

In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. Not only does being pre-approved bring clarity to your homebuying budget, but it shows sellers how serious you are about purchasing a home.

Contact a Real Estate Loan Officer

You may be interested in...

USDA Rural Development Loan

Are you dreaming of owning your own home but feel like you just don’t have any extra to set aside for a down payment? The Collins Home Team may have the perfect mortgage loan option for you. 

Adjustable-Rate Mortgage

Achieve your dreams of owning your own home with an Adjustable-Rate Mortgage (ARM) loan from Collins Community Credit Union. 

What's News

  • Get to Know Gives Back

    25 April 2024
    Read below to learn about (and listen about) our exciting partnership with The Gazette!  Learn More
  • Discounted Adventureland Tickets

    24 April 2024
    As a member of Collins Community Credit Union, you can receive a discount on Adventureland Park and Adventure Bay Water Park tickets! Learn More
  • ATM to ITM Upgrades Coming

    15 March 2024
    Upgrade your banking experience with our ATM to ITM conversion! Learn More
  • Empowering Success - A conversation on Achieve@Collins

    04 March 2024
    Embark on a journey of financial empowerment with Collins Community Credit Union’s Achieve@Collins Program (originally launched in 2022). The program, led by our Retail Team, is a financial toolkit that includes our Simple Checking account, Credit Builder loan, and Financial Wellness resources. In February 2024, our branch sales manager, Michael, presented the program at Simpson College for their Upward Bound student program. Read on for his insights on Achieve@Collins’ impact in the... Learn More
View All What's New

What's New

View All What's New