The decision to buy a home is among the most important decisions you'll ever make. As with all big decisions, it isn't one you want to walk into blindly. Our real estate agents understand that it's perfectly normal to want to focus on finding your dream home. However, the largest and most important detail to take care of is the mortgage, and you should get the preapproval process out of the way before ever starting your search.
Preapproval is your ticket to comfortable homeownership. Unlike pre-qualification, the preapproval process is more in-depth and detailed. Your lender will thoroughly review your W2 statements, bank records, credit reports, tax records, employment records, etc. This is often referred to as the "4 C's" since the lender will look at your capacity to pay the mortgage, your credit, the capital/cash reserves you have access to, and the collateral you're putting down for the loan.
The lender will carefully calculate your total liabilities and financial capacity to take on more debt. At the end of the process, the lender will tell you precisely how much they are willing to lend you. This allows you to search with confidence, knowing what you can comfortably purchase in Akron or North Canton.
Further, you can obtain preapproval letters from multiple lenders. This is advisable because it allows you to shop for the best rates and loan terms. When you find the North Canton homes for sale that you want to make an offer on, you can buy with confidence, knowing that you can comfortably afford the mortgage obligation.
One of the most important reasons to secure a preapproval letter is that it can significantly reduce the amount of time it takes to find the ideal home. By removing homes outside of your budget, you can narrow down your search to listings within neighborhoods where you can settle in comfortably without having to stretch your budget to cover the mortgage.
It's a highly competitive market right now. In much of the country, the number of homes available is far less than the number of buyers in the market. While not guaranteed, this means you need to plan for "bidding wars" to erupt. When you are preapproved, you know precisely how much you can spend to get the home you want.
A preapproval letter also shows the seller that you can seal the deal without any problem. This gives you a slight edge over other buyers who submit bids without a preapproval. Sellers may be willing to take a risk that a high bid will come through, but more often than not, they will take the offer that is already backed by money in the bank.
When you have a preapproval letter in your pocket, you can move forward quickly and confidently. There's no need to waste time waiting for the bank to review your application because everything is already done.