The First Step in Home Hunting

Currently the number of buyers searching for their dream home greatly outnumbers the number of homes for sale in many parts of San Diego, and across the Country. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

1. Capacity: Your current and future ability to make your payments

2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash

3. Collateral: The home, or type of home, that you would like to purchase

4. Credit: Your history of paying bills and other debts on time

Additionally, most Listing agents expect a Pre-Approval letter to be attached to an Offer. Without this, the Offer is considered VERY weak, no matter what the price.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well. Talk to a lender right away.