So, you want to buy a house?
It may seem counter-intuitive to have a pre-step before the main step of working through the home-buying process, but it's an important one: the preapproval.
Before shopping for a home, you should probably get a preapproval letter from at least one lender.
A preapproval letter states a lender would like to work with you, and it locks in a mortgage rate.
A letter shows you're a competitive buyer and helps you move quickly in today's hot housing market.
"One of the best ways to prepare to buy is to get a preapproval letter before you start shopping for homes. When a lender gives you an official preapproval letter, it's stating that it wants you to work with you. The company plans to lend you up to a predetermined dollar amount at a certain interest rate. Once you are preapproved, your rate is locked in for a set amount of time, usually 60 to 90 days," according to Business Insider.
While it's not required, the preapproval can help give you an advantage, especially considering the current market:
The United States is a "seller's market" right now, meaning there aren't enough houses for sale to keep up with demand so that means prices can be higher.
Negotiations can be more competitive. Having this preapproval letter on your side can make you more attractive to the seller.
Houses are being bought up from the market quickly, so if you wait to get preapproved until after you found a house you love, time could not be on your side.
Have you been preapproved for a new house?