How To Think Strategically About Buying A Home In Today's Market?
I like to compare the home buying process to a game of chess. I grew up playing chess. My dad has always been a chess fanatic and he taught my brother and me how to play chess at an early age. We learned that the game of chess provides incredible lessons that can be applied to all aspects of life. Chess requires you to plan and think about your strategy from the very beginning of the game.
Much like chess, the home buying process requires strategy and planning. Here are a few things to keep in mind to ensure your plan is as strong as possible when you begin your home search.
The first is getting a Pre-Approval from a lender. This is the best opening play when you’re buying a home. I’m sure you’ve probably heard this before, but what exactly is so important about getting pre-approved? There are a few reasons, actually:
Firstly, as Freddie Mac puts it:
“The pre-approval letter from your lender tells you the maximum amount you are qualified to borrow. Getting a pre-approval letter is not a loan guarantee, it simply states how much your lender is willing to lend you…”
A lot of buyers make the mistake of guessing how much they can afford based on what monthly mortgage payment sounds comfortable, but there are a lot of other factors that a lender considers when determining how much you can borrow such as your credit score, employment history, and debt to income ratio. The last thing you want to do is assume you can afford a certain amount and fall in love with a home that’s not within your budget.
And while determining how much you can afford at the beginning of your home search is critical, a pre-approval is also important because it shows the seller that you’re a serious buyer and that you have the ability to purchase their home.
In today’s market where a lot of buyers end up in a multi-offer situation, it’s important to have your pre-approval in hand and ready to go. It’s very unlikely for a seller to even consider an offer without a preapproval attached, and you don’t want to wait until you find your dream home before beginning the pre-approval process.
Just like in the game of chess, a strong opening move signals to your opponent that you’re a serious competitor. As a homebuyer, your pre-approval letter signals to the seller that you’re a serious buyer.
Another important thing to remember about homebuying is it’s a Team Game, Not a Single-Player Experience.
Every step you take to create your strategy as a buyer is important in today’s market. Why? Mortgage rates are still low but increasing. Prices are going up. There’s a limited supply of homes for sale.
That means leaning on expert guidance as you plan every move is more important than ever. Have a team of professionals – like your trusted real estate agent and a loan officer – every step of the way to make sure you make the right moves.
Getting a pre-approval letter isn’t just a good strategy, it can be game-changing. It allows you to get a full understanding of what you can afford, and it signals to sellers that you’re serious.
Let’s connect today to ensure you’re playing chess and being strategic during the home buying process. And if you don’t have a loan officer, I’d be happy to help connect you to a local lender who knows our Daytona Beach market and can help you make a strong opening move with a pre-approval letter.