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Why Pre-Approval Should Be Your First Step

In many markets across the country, the number of buyers searching for their dream home greatly exceeds the number of homes for sale, driving a competitive marketplace where it can be tough to stand out.

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.”

Freddie Mac describes the “4 Cs” that help determine the amount you’ll be qualified to borrow:

1. Capacity: Your current and future ability to make your payments
2. Capital or Cash Reserves: The money, savings, and investments you have that can be
sold quickly for cash
3. Collateral: The value of the assets you’re pledging as security against the loan
4. Credit: Your history of paying bills and other debts on time

If you’re ready and willing to buy, getting pre-approved will help you feel more informed and may even give you the edge you need in today’s competitive homebuying process.

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