Buying a home is an important – and exciting – decision. After all, having a place to call your own, to raise your family in, to do as you wish with no landlord to answer to are all motivating factors in starting the process.
But, in addition to these emotional reasons, buying a home can provide financial benefits as well. Take for example, that over the last 20 years, home prices in the United States have steadily risen between three to six percent. And this trend shows no signs of slowing down.
In addition to the compounding appreciation that homeowners have experienced with ownership, new home buyers will also want to consider the tax benefits that buying a home often has. As a homeowner with a mortgage, you will find that you are able to deduct the interest paid on your mortgage from your taxable income. And since early payments for new homeowners tend to consist of mostly paying on the interest of the loan, this group also tends to receive the biggest tax breaks.
All this being said, chances are that if you are seriously considering embarking on the home buying journey then you are already aware of the benefits that come with such a purchase. However, what you might not be aware of is just how important it is to get pre-qualified.
Before beginning your search, home buyers will want to understand what pre-qualified means along with why it is important. And then once you are ready, contact us to help you get pre-qualified and find a home.
What is Pre-Qualification?
Pre-qualification is an important step for homebuyers to take early in the process. What pre-qualification essentially entails is supplying a lender with relevant financial information for their review. This includes basic financial history information like your income, assets, outstanding debts, and your credit score.
Homebuyers will want to keep in mind that mortgage pre-qualification does not always require documentation of your financial history. In most cases, homebuyers can simply self-report their financial information.
With this information in hand, a lender will review it. From there, the lender will then be able to help home buyers understand what their options are moving forward.
Why Home Buyers Need Pre-Qualification
With the pre-qualification process comes a number of benefits to home buyers, namely calculating a budget that works, streamlining the purchase process, and setting yourself up as a serious buyer in the eyes of the seller.
In what is maybe the most important piece of the pre-qualification process, making the effort to complete this step helps home buyers crystallize the price range of their search. This is an essential piece of a successful home purchase as it helps prevent buyers from overextending themselves by buying a home they cannot afford. The last thing homeowners want is to end up house poor. That is, being able to barely make your house payments with no money left over for anything else.
On top of being the financially prudent thing to do, home buyers who get pre-qualified also set themselves up for a more efficient, streamlined process. After a lender reviews your financial history, you will be provided with a suggested price range that you can comfortably afford. By knowing this range from the onset of the home shopping process, buyers are able to avoid wasting their valuable time visiting or setting up scheduled viewings of homes that fall outside of this range.
Having this range in mind will also help home buyers avoid heartbreak. Far too often, home buyers fall in love with a home that they think is perfect, only to find out that the actual price is more than they can realistically afford.
Lastly, and maybe the most powerful reason for completing the pre-qualification process, homebuyers who are pre-qualified send a signal to sellers that they should be taken seriously. This is especially important in those situations when a seller has received multiple offers. In a multi-offer scenario, sellers will take a number of factors into consideration in order to make the safest bet. And believe it or not, the “highest offer” is not always the “best offer” in the eyes of the seller.
Homebuyers capable of demonstrating that they have a solid chance of being approved for a mortgage are far less risky for sellers. Which means that if you are hoping to stand out from the pack when submitting an offer, you will want to be able to show that you have the necessary credentials behind you.
Again, buying a home is an exciting time. But in order to succeed, home buyers need to have a clear understanding of what is involved.
Because getting pre-qualified is so important, we want to help arrange to have this done for you at no cost. From there, we will be able to either help get you into one of our homes that fits your needs or put you in touch a licensed agent to help you uncover the right home for you.