Mortgage rates are close to record lows and now is a great time to finance a home. But with very limited inventory, it’s easier said than made an offer due to fierce competition.
As of the end of June, the total housing stock was 1.25 million units, according to Realtor.com. While this represents a modest increase over May, inventories were still down 18.8% from the previous year at the time.
Because there is such a shortage of affordable homes, many of today’s listings are being closed due to bidding war… How real estate investor, this is something you might be familiar with and the idea to discuss it with another buyer for profitable property may not sound too complicated. But if you want to give yourself the edge in the betting war, there is one important step to take.
Get verified before placing a bet
Sellers today have no shortage of interested buyers. However, in some cases, they may lack skilled buyers. Lenders tightened borrowing standards during the pandemic to deal with economic uncertainty. So, when sellers run the risk of finding a buyer who needs funding to buy a home, they run the risk of disrupting the deal.
Many investors have the opportunity to use capital in their existing properties to add new ones to their portfolios. But if you intend to fund your next income with a mortgage, then getting a pre-approval letter is a really important step.
You may be aware that a pre-approval letter does not formally guarantee you a mortgage. But this letter does mean that the lender has checked your finances and decided that you theoretically have the right to borrow a certain amount of money to buy a home. This is the kind of information that should be offered to sellers right now.
Imagine you’re in a bidding war with a handful of other buyers whose budgets are similar to yours. If you are the only buyer in this group with a pre-approval letter, the seller may be more inclined to agree with your offer than with another, provided your bid is competitive.
Plus, if you’re already planning to fund your next income with a mortgage, getting pre-approval won’t require a lot of extra work from you. During the home loan application process, you need to provide the lender with extensive documentation, so collecting this data for pre-approval purposes will leave you less work after the fact.
Increase your chances of success
Now that more jobs are being added to the economy and unemployment is declining, demand for rental units may continue to grow in the near future as people reach a point where they are financially stable enough to start signing leases. A plus, rental prices are rising in most markets, so if you buy a profitable property now, there is a good chance that you will be able to get a lot of money for it.
If you would like to improve your chances of getting a profitable property offer accepted, contact your lender to receive a pre-approval letter. This might work for you when you face stiff competition.
Unfair Advantages: How Real Estate Became A Billionaire Factory
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