If you're planning to purchase a home you've probably heard of the term pre-approval. Pre-approval is a very critical and necessary step when to do before beginning your pursuit to purchase a home. Well you maybe asking now, "What exactly is a pre-approval and why is it so necessary?"
The Federal Home Loan Mortgage Corporation (FHLMC) or more commonly known as Freddie Mac defines the pre-approval process as "an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. The lender works with you to provide an official document that states the maximum amount that they are willing to lend you." So simply put, the pre-approval process helps you know what price range to look at with and how much can be borrowed with what you have.
Now, why is it so important? Not only does it indicated what price range for you to look at it may also seal your deal! Submitting your pre-approval letter with your offer may be the edge you need to beat out the competition. Some sellers may not even consider your offer without one because its that important! It helps the seller know that you are serious and able to finance the purchase.
With this new acquired knowledge, go get pre-approved! It'll better help you understand what's in your budget and get you on the track to homeownership. With the constant change of todays market being already pre-approved puts you one step ahead of the game.