Why Pre-Approval Is Even More Important This Year
Are you on the road to becoming a Kansas City homeowner? You may have heard the term "pre-approval" tossed around. To understand how pre-approval affects your decision to buy a home in Kansas City in 2024, the Just Say Home KC real estate experts explain this part of the homebuying journey below.
What is Pre-Approval?
During the homebuying process, your KC lender will examine your finances to determine your loan amount. Investopedia clarifies that this review includes your W-2, tax returns, credit score, bank statements, and more. After checking these documents, your lender will provide a pre-approval letter to clarify how much money you can borrow. Freddie Mac explains it like this:
"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. . . . Keep in mind that the loan amount in the pre-approval letter is the lender's maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying."
This last piece is essential. Kansas City home affordability is getting better, but is still tight. Remember: knowing what you can borrow from a lender doesn't mean you should borrow the full amount. The Just Say Home Team can offer insight into the current Kansas City housing market and how this affects your budget, giving you a definite idea of how much you can safely borrow. This understanding will help you make sense of the financial aspects of finding the perfect home.
Making an informed decision about home financing is crucial to the homebuying process. JSH real estate agents will set you up for success by helping you tailor your Kansas City home search to your budget comfort level. Understanding these numbers will empower you to act quickly when you find a home you love.
Why is Pre-Approval Important in 2024?
For interested Kansas City buyers looking to purchase a home this year, working with a trusted lender to make pre-approval is key. Why?
While the number of homes listed for sale has increased, the overall KC home supply is still below the norm. Additionally, the recent downward trend in mortgage rates compared to last year is bringing more buyers back into the Kansas City market. The increased buyer demand and low home supply imbalance creates a slight tug-of-war for those looking to become homeowners.
As more people who had been sitting on the sidelines when mortgage rates were higher decide to jump back in, you'll likely find you have more competition from other buyers. The good news? Pre-approval can give you an advantage.
Pre-approval indicates the seriousness of your offer to sellers because you've already undergone a credit and financial check. As Greg McBride, Chief Financial Analyst at Bankrate, says:
"Pre-approval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements. A pre-approval means you've cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount."
Kansas City sellers love pre-approved buyers because of the increased likelihood the sale will move forward without unexpected delays or issues. If you compete with another buyer to land your dream home, pre-approval can help stack the deck in your favor.
If you want to buy a Kansas City home in 2024, getting pre-approved is an essential piece of the puzzle. As lower mortgage rates are drawing more interested buyers back into the KC housing market, pre-approval can help you make a proactive offer that stands out from the crowd. Just Say Home Real Estate can help with every part of this process, from connecting you to trusted Kansas City lenders to helping you understand your budget.