Summary: Recent data shows that most first-time home buyers in Washington State and nationwide shop for a mortgage loan before shopping for a home. There are several advantages to taking this preliminary step prior to house hunting, which we will outline in this article.
Are you thinking of buying a home in Washington State? Have you gotten pre-approved for a mortgage before you start your home search? Many first-time homebuyers get their financing in order before they search for their first home, according to recent date, which is a smart step to take.
First-Time Buyers Shop for Financing First, and Homes Second
The Washington Post recently reported the results of a survey that showed “74 percent of buyers looked into their home financing options before shopping and, among first-time buyers, that number jumps to 85 percent.”
According to the report and survey, most buyers view mortgage pre-approval as a worthwhile step. They also feel that it makes sense to do it before finding a real estate agent or house hunting. Pre-approval also gives them more confidence regarding their purchase, and a better understanding of what they can afford to buy.
This is something we’ve blogged about in the past. In a typical real estate scenario where a mortgage loan is being used, it makes sense for home buyers to get pre-approved before house hunting.
The biggest benefits of pre-approval are:
- It enables you to whittle your house-hunting list down to a specific price range, which can be a huge time-saver.
- It helps you avoid any disappointment.
- It helps you spot any obstacles to financing early on in the process, so you can address them before you move forward.
- It can help the final mortgage approval process move along faster when you and the seller come to an agreement.
- It could also make the home seller more inclined to accept your offer. (See next section for more on this.)
Check out our guide: 11 basic steps in the buying process.
Pre-Approvals Important in a Competitive Real Estate Market
As the Post article rightly pointed out, getting pre-approved before house hunting is even more important in a competitive real estate market. And that describes most cities across Washington State, as of early 2020.
To quote the story:
“a [mortgage loan] preapproval is essential in a competitive market where homes sell quickly and sellers have a choice of offers.”
Being pre-approved by a lender shows the seller that you are serious about buying their property, and that you have your financing line up. That’s a big deal in the eyes of a seller, and it could help your offer rise to the top.
The real estate market in Washington is heating up. Prices have risen 4.9% over the past year and are expected to climb another 4.8% over the next 12 months. The average price in Washington State for a home is currently $419,900, and that price is just going to go up.
Inventory is tight right now in centers right across the state, and in some markets, there’s just a one-month supply of homes available for sale to meet demand. In Seattle and King County, for instance, there is barely a 1-month supply of homes.
That means competition is rather fierce, which is why buyers need to put their best foot forward when putting in an offer, and going into an offer with a pre-approval letter in hand is a great way to get a leg up on the competition.
Given these conditions, it’s important for home buyers to utilize every advantage they can get in order to find and purchase a property. Mortgage pre-approval is one of several steps toward that goal. It helps set the stage for a more successful house hunting process.
Do You Have Any Mortgage Questions You Need Answered?
If you’re thinking of getting a mortgage in Washington state, then you may want to consider getting pre-approved first, and Sammamish Mortgage can help with that. We’ve been helping home buyers and homeowners across the state of Washington for about 28 years and offer many mortgage programs for you to choose from. Please contact us if you have mortgage-related questions, or to receive a loan estimate.