Why Pre-Approval Is Even More Important This Year

Mortgage

Are you on the path to homeownership? If so, you've probably encountered the term Pre-approval. Let's clarify what it means and why it holds significant weight, especially if you're aiming to purchase a home in 2024.

What Exactly is Pre-Approval?

In the process of buying a home, your lender assesses your financial situation to determine the amount they're willing to lend you. This evaluation involves scanning your **W-2s, tax returns, credit score, bank statements,** and other pertinent documents. After that, they will provide you with a pre-approval letter, which outlines the sum you can borrow.

According to Freddie Mac, this letter signifies:

“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home..."


It's crucial to understand that the figure specified in the pre-approval letter represents the maximum amount the lender is prepared to offer. However, it's advisable to borrow only what you're comfortable repaying.

Why Pre-Approval Holds Greater Significance in 2024

If you're eyeing a home purchase this year, there's another compelling reason to prioritize pre-approval, especially in the Naperville and Chicago suburbs.

1. Increased Competition

Despite more homes hitting the market, the inventory remains below average. Concurrently, the recent decline in mortgage rates has enticed more buyers into the fray. This dynamic creates a scenario where demand outstrips supply, intensifying competition among buyers.

2. Gain Competitive Edge

In such a competitive landscape, pre-approval becomes your ace in the hole. It communicates to sellers that you're a serious contender, having already undergone a thorough financial and credit assessment.
Greg McBride of Bankrate underscores the importance:

“Pre-approval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances..."

This endorsement reassures sellers that the transaction is more likely to progress smoothly, reducing the likelihood of unforeseen delays or complications. If you find yourself vying with other buyers for your dream home, securing pre-approval significantly bolsters your position.

 

The Bottom Line

For prospective homebuyers in 2024, obtaining pre-approval is important. With the comeback of buyers driven by lower mortgage rates, this step empowers you to present a compelling offer that distinguishes you from the competition. So, if homeownership is on your agenda this year, remember, pre-approval is not just a formality, it's a strategic move that can make all the difference.

Call Teresa Ryan today, at 630-276-7575 for expert advice and guidance when you buy your first home in the Chicago suburbs!


Get a copy of our Home Buyer Guide written by Teresa Ryan for Chicagoland home buyers, visit: FREE Home Buyer's Guide

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