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If you’re thinking of buying a home in today’s housing market, you may be wondering how strong your investment will be. You might be asking yourself: if I buy a home now, will it lose value? Or will it continue to appreciate going forward? The good news is, according to the experts, home prices are not projected to decline. Here’s why.

With buyers still outweighing sellers, home prices are forecast to continue climbing in 2022, just at a slower or more moderate pace. Why the continued increase? It’s the simple law of supply and demand. When there are fewer items on the market than there are buyers, the competition for that item makes prices naturally rise.
And while the number of homes for sale today is expected to improve with more sellers getting ready to list their houses this winter, we’re certainly not out of the inventory woods yet. Thus, the projections show continued appreciation, but at a more moderate rate than what we’ve seen over the past year.
Here’s a look at the latest 2022 expert forecasts on home price appreciation:What Everyone Wants To Know: Will Home Prices Decline in 2022? | MyKCMWhat’s the biggest takeaway from this graph? None of the major experts are projecting depreciation in 2022. They’re all showing an increase in home prices next year.
And here’s what some of the industry’s experts say about how that will play out in the housing market next year:
Brad Hunter of Hunter Housing Economics explains:

“. . . the recent unsustainable rate of home price appreciation will slow sharply. . . . home prices will not decline. . . but they will simply rise at a more sustainable pace.”

Danielle Hale from realtor.com agrees:

Price growth is expected to move back toward a normal range, but this is on top of recent high prices, . . . So prices will [still] hit new highs. . . . The pace of price growth is going to slow notably . . . ”

What Does This Mean for the Housing Market?

While home price appreciation is expected to continue, it isn’t projected to be the record-breaking 18 to almost 20% increase the market saw over the past 12 months. Overall, it’s important to note that price increases won’t be as monumental as they were in 2021 – but they certainly won’t decline anytime soon.

What Does That Mean for You?

With motivated buyers in the market and so few homes available to purchase, the imbalance of supply and demand will continue to put upward pressure on home prices in 2022. And when home price appreciation is in the forecast, that’s a clear indication your investment in homeownership is a sound one.
It’s important to know that home prices are not projected to decline in the new year. Instead, they’re forecast to rise, just at a more moderate pace.

 

From the opportunity to take advantage of today’s low mortgage rates to changing homeowner needs, Americans have more motivation than ever to buy a home. According to the experts, buyers are making moves right now, creating an unseasonably strong housing market for this time of year.
As we wrap up the fall season and move into the winter months, here’s a look at what several industry leaders have to say about the continued momentum in the current market, and what it means as we head into the early part of next year.

Lawrence Yun, Chief Economist, National Association of Realtors (NAR)

“This solid buying is a testament to demand still being relatively high, as it is occurring during a time when inventory is still markedly low. The notable gain in October assures that total existing-home sales in 2021 will exceed 6 million, which will shape up to be the best performance in 15 years.” 

Odeta Kushi, Deputy Chief Economist, First American

“So far in November, purchase applications point to another strong month in sales. Still low rates and demographic demand support this strength, even as affordability and inventory headwinds remain.”

The M Report

“The demand for housing in the United States has reached a fever pitch, a trend that opposes the norm of this time of the year when the market cools as the winter months set in.”

Mark Fleming, Chief Economist, First American

Strong demographic demand will continue to act as the wind in the housing market’s sails.”

What does this mean for the winter housing market?

Buyers are actively in the market, and they’re competing for homes to purchase. With the momentum coming out of this fall, all signs point to the winter housing market picking up steam, making it much busier than in a more typical year. And as we’ve seen in so many ways, 2020 and 2021 were anything but typical in real estate. It looks like 2022 may be joining that list before we know it.
If you think the housing market will slow down this winter, think again.

The sense of pride you’ll feel when you purchase a home can’t be overstated. For first-generation homebuyers, that feeling of accomplishment is even greater. That’s because the pride of homeownership for first-generation buyers extends far beyond the homebuyer. AJ Barkley, Head of Neighborhood and Community Lending for Bank of Americasays:

“Achieving this goal can create a sense of pride and accomplishment that resonates both for the buyer and those closest to them, including their parents and future generations.”

In other words, your dream of homeownership has far-reaching impacts. If you’re about to be the first person in your family to buy a home, let that motivate you throughout the process. As you begin your journey, here are three helpful tips to make that dream come true.

1. Reach Out to a Real Estate Professional

It’s important to reach out to a trusted advisor early in your homebuying process. Not only can an agent help you find the right home, but they’ll serve as your expert advisor and answer any questions you might have along the way.
The latest Profile of Home Buyers and Sellers from the National Association of Realtors (NAR) surveyed first-time homebuyers to see how their agent helped them with their home purchase (see chart below):Advice for First-Generation Homebuyers | MyKCM
As the graph shows, your agent is a great source of information throughout the process. They’ll help you understand what’s happening, assess a home’s condition, and negotiate a contract that has the best possible terms for you. These are just some of the reasons having an expert in your corner is critical as you navigate one of the most significant purchases of your life.

2. Do Your Research and Know What You Can Afford

The second piece of advice for first-generation homebuyers is practical: do your research so you know what you can afford. That means getting your finances in order, reviewing your budget, and getting pre-approved through a lender. It also means learning the ins and outs of what it takes to pay for your home, including what you’ll need for a down payment.
Many homebuyers believe the common misconception that you can’t purchase a home without coming up with a 20% for a down payment. As Freddie Mac says:

“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”

The chart below shows what recent homebuyers have actually put down on their purchases:Advice for First-Generation Homebuyers | MyKCM
On average, first-time buyers only put 7% down on their home purchase. That’s far less than the 20% many people believe is necessary. That means your down payment, and your home purchase, may be in closer reach than you realize. Keep that in mind as you work with a real estate professional to better understand what you’ll need for your purchase.

3. Don’t Lose Sight of What Home Means to You

Finally, it’s important keep in mind why you’re searching for a home to begin with. Overwhelmingly, first-generation homeowners recognize the financial and non-financial benefits of owning a home. In fact, in a recent survey:

As AJ Barkley explains:

“For many first-generation homeowners and their families, homeownership has a unique importance, given the collective efforts to overcome financial challenges that can often span generations…”

 

Let’s jump right in and discuss inventory. When do most listings come on the market? In a normal market, it would be the second quarter of each year (around spring). But the market is anything but normal right now, and showing signs that we will probably see more listings this winter than at any other time this year.
Home sellers have historically moved when something in their lives changed – a new baby, a marriage, a divorce or a new job. . . . The pandemic has impacted everyone, and for many this became an impetus to sell and make a housing trade. Jessica Lautz, VP of Demographics and Behavioral Insights at NAR . . . the pandemic likely spurred occupants to shorten their home stay, as tenure in the home decreased to eight years from 10 years, according to the report. This is the largest single-year change in home tenure since NAR began collecting such data. National Association of Realtors® Average Home Tenure (how long people own their homes) average 6 years 1985-2008. Average 9 years 2009-2020. Stands at 8 years right now. https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers
From 1985 to the 2008 housing crisis, people stayed in their home an average of 6 years. Now, coming out of the pandemic, we’re seeing that dip down representing pent-up seller demand from all those years that folks have stayed in their homes and the fact that the meaning of home has changed for many.
The pandemic has delayed plans for many Americans, and homeowners looking to move on to the next stage of life are no exception. Recent survey data suggests the majority of prospective sellers are actively preparing to enter the market this winter. George Ratiu, Manager of Economic Research for Realtor.com
So what’s going on with interest rates? The overall outlook is interest rates are going to rise.
 
So going back, a lot of reasons we just talked about, folks thinking about moving, this study is saying we’re seeing a lot of those people preparing to enter the market this winter. In that study, 65 percent said they have either just listed or plan to this winter, 93 percent say they’ve already taken the steps towards listing their home, including working with an agent, 36 percent have researched the value of their home and others in the neighborhood, as well as started making repairs or doing what they need to do to sell their home. https://news.move.com/2021-11-11-Low-Temps,-High-Expectations-Realtor-com-R-Survey-Shows-65-of-Prospective-Sellers-Plan-to-Enter-the-Market-this-Winter
 
Prior to the pandemic interest rates were right around 4%. Right now, the average 30-year fixed is 3.1%. Most experts are predicting that to increase this coming year – perhaps to pre-pandemic levels of about 4%.
January of 2020, prior to the pandemic, knocking on the door of 4 percent. Right now the average 30-year fixed is 3.1 percent. Many calling for that rise going into next year, I’ll show you what forecasters are saying, but if you were to ask me what’s going to happen with interest rates, I think we’re going to go back to where we were. This is a historical perspective on interest rates, you know looking at 2016, ‘17, ‘18, ‘19, four really, I’m going to call them normal, years in real estate and we balanced somewhere between three and a half and 5 percent. I think we’re heading back there. I think we’re heading back into a much more normal interest rate environment. We’ve seen some phenomenal rates over the last year or so, historically low rates on a 30-year fixed, and I think we’re going to head back into a time where we were prior to the pandemic. http://www.freddiemac.com/pmms/
Looking at historical interest rates, where 2016 to 2019 were pretty normal years in real estate, we saw between 3.5% and 5%. This seems to be where we are headed for 2022.
This is a historical perspective on interest rates, you know looking at 2016, ‘17, ‘18, ‘19, four really, I’m going to call them normal, years in real estate and we balanced somewhere between three and a half and 5 percent. I think we’re heading back there. I think we’re heading back into a much more normal interest rate environment. We’ve seen some phenomenal rates over the last year or so, historically low rates on a 30-year fixed, and I think we’re going to head back into a time where we were prior to the pandemic. http://www.freddiemac.com/pmms/pmms_archives.html
Home prices are slightly impacted by rising mortgage rates. Looking all the way back to 2000, a rising interest rate environment doesn’t see depreciation (with the exception of the housing crisis). Price appreciation is resistant to rising mortgage rates.
Home prices are slightly impacted by rising mortgage rates. This is a look going all the way back to 2000 and what you see in the line graph there is the interest rate, and what you see in the bar graph is appreciation or depreciation during the housing crisis. The quick thing I want to point out is in each rising interest rate environment there’s no depreciation, except during that housing crisis, and we see okay, when you start to look at rising interest rate environments, the first one around 2005, less appreciation in 2006. You look at kind of 2012, ‘13 and ‘14, rising interest rate environment, less appreciation the last year. The next one, in ‘16, ‘17 and ‘18, we go up and come back down a little bit, so a slight impact in home price appreciation. freddiemac.com https://cdn.blackknightinc.com/wp-content/uploads/2021/04/BKI_MM_Feb2021_Report.pdf House price appreciation is resistant to rising mortgage rates primarily because most home sellers would rather withdraw from the market than sell at lower prices – a phenomenon we refer to as ‘downside sticky’. Mark Fleming, Chief Economist at First American if you go back, all the way back to 1999, which is what you see in this graphic, where we have interest rates in the line graph and home sales in the bar graph, we can see home sales aren’t impacted by rising mortgage rates. nar.realtor www.freddiemac.com
So are home sales impacted by rising interest rates? Looking all the way back to 1999, we can see home sales aren’t impacted by rising mortgage rates.
The economy is improving. First graphic, mortgage rate projections. This is an outlook from the four leading providers we follow; Fannie, Freddie, MBA and NAR, and what are they saying? Sometime between the middle and the end of next year, forecasting between three and a half and 4 percent in the average 30-year fixed, so it’s going to cost more and I think you should expect interest rates to rise. http://www.freddiemac.com/research/forecast/20211015_quarterly_economic_forecast.page? https://www.fanniemae.com/media/41656/display https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary https://cdn.nar.realtor/sites/default/files/documents/forecast-Q4-2021-us-economic-outlook-10-28-2021.pdf
Fannie Mae, Freddie Mac, the Mortgage Bankers Association (MBA), and the National Association of Realtors® (NAR) are the 4 leading providers of mortgage rate projections. They are predicting between 3.5% and 4% in the average 30-year fixed interest rate in 2022.
forecasters are calling for 5.1 on average, percent appreciation in housing next year, and you see anywhere from seven and a half to almost 3 percent appreciation on the low side. This is a direct nod to seeing more inventory come in the market, you know, the price will always be dictated by supply and demand in any market. https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary https://cdn.nar.realtor/sites/default/files/documents/forecast-Q4-2021-us-economic-outlook-10-28-2021.pdf https://www.fanniemae.com/research-and-insights/forecast http://www.freddiemac.com/research/forecast/index.page https://pulsenomics.com/surveys/#home-price-expectations
Now let’s take a look at the home price forecast for 2022. Forecasters are calling for an average of 5.1% appreciation in housing next year – a direct nod to seeing more inventory come in the market. We can expect relative to the housing market going into next year.
You know the other question that starts to come up and is on people’s minds at times is, is the housing market going to crash. I’m concerned about what I’ve seen, and forbearance and all the things that we know have happened in our business, the bottom line here is that housing sales are forecasted to increase this year and perform very well again in 2022. We always want to remind people that last year in 2020, we sold six and a half million homes in this country. We’re forecasted to sell more than that this year and more than that next year, leading for the past two years, phenomenal years in the real estate market, a very, very good year next year as well. https://www.fanniemae.com/media/41126/display http://www.freddiemac.com/research/forecast/index.page https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary https://cdn.nar.realtor/sites/default/files/documents/forecast-Q4-2021-us-economic-outlook-10-28-2021.pdf
A market crash is a concern for some people right now, but housing sales are forecasted to increase this year and perform very well again in 2022.
This slide here always does a great job to show just where we’re at in the real estate market based on months of inventory in the extreme seller’s market that we’re in. Thinking about selling your home? There’s literally never been a better time, and sometimes that feels like a broken record in us saying, and I know certainly all of you out there that are working with sellers and thinking about selling have said that many, many times. This graphic just underscores it, underscores going all the way back to 1999, what does the market look like, and it’s been a great seller’s market for those that have decided to sell. You know the last question that I’ll kind of address on these slides, that you need to have on your phone, the buyer that says I don’t know if I want to buy at the top of the market which, you know, you look at price appreciation, it’s certainly not the top of the market but that is a feeling. The buyer that says, you know if we sell, we’re going to have to pay more for another home, is what’s forecasted for appreciation. nar.realtor https://www.nar.realtor/topics/existing-home-sales https://www.nar.realtor/newsroom/existing-home-sales-jump-6-5-in-february
We are in an extreme seller’s market.
$111,285 potential growth in household wealth over the next five years based solely on increased home equity if you purchase a $350K home in January 2021 https://pulsenomics.com/surveys/#home-price-expectations
The Home Price Expectations Survey forecasts $111,000 in appreciation over the next 5 years. Seems like it’s the perfect time to both sell and buy right now.

 

If you’re a homeowner who’s decided your current house no longer fits your needs, or a renter with a strong desire to become a homeowner, you may be hoping that waiting until next year could mean better market conditions to purchase a home.
To determine whether you should buy now or wait another year, you can ask yourself two simple questions:

  1. Where will home prices be a year from now?
  2. Where will mortgage rates be a year from now?

Let’s shed some light on the answers to both of these questions.

Where Will Home Prices Be a Year from Now?

Three major housing industry entities are projecting ongoing home price appreciation in 2022. Here are their forecasts:

According to the National Association of Realtors (NAR), the median price of a home today is $353,900. Using an average of the three price projections above (6.5%), a home that sold for $353,900 today would be valued at $376,904 at the end of next year. As a prospective buyer, you would therefore pay an additional $23,004 by waiting.

Where Will Mortgage Rates Be a Year from Now?

Today, Freddie Mac announced their 30-year fixed mortgage rate was at 3.1%. However, most experts believe mortgage rates will rise as the economy recovers. Here are the forecasts for the fourth quarter of 2022 by the three major entities mentioned above:

That averages out to 3.7% if you include all three forecasts. Any increase in mortgage rates will increase your costs.

What Does It Mean for You if Home Values and Mortgage Rates Increase?

If both variables increase, you’ll pay a lot more in mortgage payments each month. Let’s assume you purchase a $353,900 home today with a 30-year fixed-rate loan at 3.1% (the current rate from Freddie Mac) after making a 10% down payment. According to mortgagecalculator.net, your monthly mortgage payment would be approximately $1,360 (this does not include insurance, taxes, and other fees because those vary by location).
That same home one year from now could cost $376,904, and the mortgage rate could be 3.7% (based on the industry forecasts mentioned above). Your monthly mortgage payment after putting down 10%, would be approximately $1,561.Two Reasons Why Waiting To Buy a Home Will Cost You | MyKCMThe difference in your monthly mortgage payment would be $201. That’s $2,412 more per year and $72,360 over the life of the loan.
Add to that the approximately $23,004 a house with a similar value would build in home equity this year due to home price appreciation, and the total net worth increase you could gain by buying this year is over $95,364 (the $72,360 mortgage savings plus the $23,004 potential gain in equity if you buy now).
When asking if you should buy a home, you may think of the non-financial benefits of homeownership. When asking when to buy, the financial benefits make it clear that doing so now is much more advantageous than waiting until next year.

 

There’s no question that the financial benefits of selling a house are outstanding today. Now is truly a great time to list if you’re ready to make a change. But if you do sell your house right now, you may be wondering where you’ll go when you move.
With so few homes available to buy right now, you might be considering building a new home as one of your options. But you may be unsure if that’s the way to go. Let’s compare the benefits of a newly built home versus moving into an existing one, and why working with a real estate agent throughout the process is mission-critical to your success no matter what you decide.

The Pros of Newly Built Homes

First, let’s look at the benefits of purchasing a newly constructed home. With a brand-new home, you’ll be able to:

1. Create your perfect home.

If you build a home from the ground up, you’ll have the option to select the custom features you want, including appliances, finishes, landscaping, layout, and more.

2. Cash-in on energy efficiency.

When building a home, you can choose energy-efficient options to help lower your utility costs, protect the environment, and reduce your carbon footprint.

3. Minimize the need for repairs.

Many builders offer a warranty, so you’ll have peace of mind on unlikely repairs. Plus, you won’t have as many little projects to tackle. QuickenLoans puts it like this: 

“Buying a new construction vs. existing home typically means you’ll have fewer repairs to do. It can be a huge relief to know that it’s unlikely you’ll have to repair the roof or replace the furnace.”

4. Have brand new everything.

Another perk of a new home is that nothing in the house is used. It’s all brand new and uniquely yours from day one.

The Pros of Existing Homes

Now, let’s compare that to the perks that come with buying an existing home. With a pre-existing home, you can:

1. Explore a wider variety of home styles and floorplans.

With decades of homes to choose from, you’ll have a broader range of floorplans and designs available.

2. Join an established neighborhood.

Existing homes give you the option to get to know the neighborhood, community, or traffic patterns before you commit.

3. Enjoy mature trees and landscaping.

Established neighborhoods also have more developed landscaping and trees, which can give you additional privacy and curb appeal. As Investopedia says, if you buy an existing home:

“Odds are, too, that the home will have mature landscaping, so you won’t have to worry about starting a lawn, planting shrubs, and waiting for trees to grow.”

4. Appreciate that lived-in charm.

The character of older homes is hard to reproduce. If you value timeless craftsmanship or design elements, you may prefer an existing home. According to Houseopedia:

Charm is priceless. Existing homes, especially those built in the 1950’s or before, often offer architectural elements, historic charm and a quality of craftsmanship not available in new homes.”

The choice is yours. When you start your search for the perfect home, remember that you can go either route – you just need to decide which features and benefits are most important to you. Working with the guidance of your trusted real estate advisor will help you make the most informed and educated decision, so you can move into the home of your dreams.
 

 

If you’re trying to decide when to sell your house, there may not be a better time than this winter. Selling this season means you can take advantage of today’s strong sellers’ market when you make a move.

Win When You Sell

Right now, conditions are very favorable for current homeowners looking for a change. If you sell now, here’s what you can expect:

Win When You Move

In addition to these great perks, you’ll also win big on your next move if you sell now. CoreLogic reports homeowners gained an average of $51,500 in equity over the past year. This wealth boost is the result of buyer competition driving home prices up. You can leverage that equity to fuel a move, before mortgage rates and home prices climb higher. To get a feel for how rates are projected to rise, see the chart below.Win When You Sell (And When You Move) | MyKCMThe longer you wait to make your move, the more it will cost you down the road. As mortgage rates rise, even modestly, it will impact your monthly payment when you purchase your next home. Waiting just a few months to make that change could mean a long-term financial impact.
The good news is today’s rates are still hovering in a historically low range. According to Doug Duncan, Senior VP and Chief Economist at Fannie Mae:

“Right now, we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low . . .

Selling before rates climb higher means you can make your move and lock in a low rate on the mortgage for your next home. This helps you get more home for your money and keeps your payments down too.
As a homeowner, you have a great opportunity to get the best of both worlds this season. You can truly win when you sell and when you buy.

 

Since the pandemic began, Americans have reevaluated the meaning of the word home. That’s led some renters to realize the many benefits of homeownership, including the feelings of security and stability and the financial benefits that come with rising home equity. At the same time, many current homeowners have decided their house no longer meets their needs, so they moved into homes with more space inside and out, including a home office for remote work.
However, not every purchaser has been able to fulfill their desire for a new home. Here are two obstacles some homebuyers are facing:

This past week, both of those challenges have been mitigated to some degree for many purchasers. The FHFA (which handles mortgages by Freddie MacFannie Mae, and the Federal Housing Administration) is raising its loan limit for prospective purchasers in 2022. The term used to describe the maximum loan amount they will entertain is the Conforming Loan Limit.

What Is the Difference Between a Conforming Loan and a Non-Conforming Loan?

Investopedia explains the difference in a recent post:

“Conforming loans are the only loans that meet the requirements to be acquired by Fannie Mae and Freddie Mac. Jumbo loans, which exceed the conforming limit, are the most common type of nonconforming loan.”

What Difference Does It Make to Me as a Home Buyer?

Forbes article earlier this year explains the benefits of a conforming loan and why they exist:

“Since lenders can’t sell non-conforming loans to Fannie Mae or Freddie Mac to free up their cash, they’re a bit riskier for the lender. This is especially true for jumbo loans, which aren’t backed by any government guarantees. If you default on a jumbo loan, it’s a huge blow to the lender.
Thus, lenders generally charge higher interest rates to compensate, and they can have even more requirements. For example, lenders who give out jumbo loans often require that you make a down payment of at least 20% and show that you have at least six months’ worth of cash in reserve, if not more.”

What Happened Last Week?

The FHFA has significantly increased its Conforming Loan Limits for 2022. Sandra L. Thompson, FHFA Acting Director, explains in the press release that:

“Compared to previous years, the 2022 Conforming Loan Limits represent a significant increase due to the historic house price appreciation over the last year. While 95 percent of U.S. countie​s will be subject to the new baseline limit of $647,200, approximately 100 counties will have conforming loan limits approaching $1 million.”

This means that more homes now qualify for a conforming loan with lower down payment requirements and easier lending standards – the two challenges holding many buyers back over the last year.
The Federal Housing Administration (FHA) also increased its Conforming Loan Limits for 2022. That could also mean an easier path to homeownership for many prospective buyers. As the Forbes article explains:

“FHA loans can be very beneficial if you don’t have as much savings, or if your credit score could use some work.”

Buying your first or your next home may have just gotten much easier (less stringent qualifying standards) and less expensive (possibly lower mortgage rate). Let’s connect to discuss how these changes may impact you.

Resources:
  1. To get more information on the new FHFA Conforming Loan Limits, click here.
  2. To get more information on the new FHA Conforming Loan Limits, click here.
The maximum loan limit will increase in over 3,000 counties, and remain unchanged in only about 45.
Visit the FHA’s “Mortgage Limits” webpage for more information.
 

 

The game of chess can provide incredible lessons to apply to all aspects of life, including the homebuying process. Chess requires you to plan and think about your strategy from the very beginning of the game.
The homebuying process, like chess, 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.

Pre-Approval: the Best Opening Play To Make as a Homebuyer

It’s important to have a great opening play when you’re buying a home. And the best move you can make when you begin your home search is getting pre-approved by a lender. You’ve probably already heard this is an important step, but what exactly is pre-approval and what benefits does it provide you?
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. . . .”

And while determining how much you can afford at the start of your search is critical, the pre-approval letter also serves another important purpose. Freddie Mac also notes:

“This pre-approval allows you to look for a home with greater confidence and demonstrates to the seller that you are a serious buyer.”

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, interested buyer.

Homebuying: 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. These are just a few key variables in today’s market you need to be prepared for.
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 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.

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