Right now, it is more important than ever to ensure that you are pre-approved before you start to look at homes for sale.
Ryan Haley, owner and broker of Atlantic Shores Sotheby’s International Realty, lets us in on why it’s crucial to get pre-approval.
It’s always been the case that it is a good idea to have your ducks in a row before starting to look at real estate. Part of that involves communicating with a lender to ensure that you have the financial ability to be able to purchase a property. This is typically done through the pre-approval process.
However, in today’s real estate market, there are two reasons why it’s more important than ever to get pre-approved.
Reason 1: We Are in a Seller’s Market
We are still in a very strong seller’s market, which means there is very low inventory and very high demand for homes. Without a pre-approval letter accompanying your offer, it’s almost a guarantee that the seller will not take your offer seriously. This limits your negotiation power.
Reason 2: Rising Interest Mortgage Rates
Another reason it’s important to be pre-approved is because of the rapid rising in mortgage interest rates.
Since the beginning of 2022, we’ve seen those interest rates climb by a 0.5%. So, if have talked to a lender in the past but have not gotten the full pre-approval letter, they may have given you some numbers to think about, and these could be your ballpark payment based on certain interest rates.
A lot of those numbers have now changed. It does not mean that it’s not a good time to buy as there are still lots of opportunities. But most likely, your ability to buy a more expensive home has been decreased a little, based solely on the fact that mortgage interest rates have increased. That said, it’s important for you to have a conversation with a good local lender who understands the marketplace and can give you great advice when it comes to getting pre-approved for your purchase.
Do you have any questions about this topic or anything related to the real estate market in Maryland or Delaware? Let us know, and we’ll be happy to discuss it with you.