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Consumers are increasingly entering the real estate market. In fact, many prospective buyers are actively involved in searching for a home.

A new report highlights that of the adults who expect to purchase real estate over the next year, 46 percent are hunting down a home. The Housing Trends Report, which is conducted by the National Association of Home Builders, further drills down that 56 percent of senior buyers and 50 percent of millennial buyers expect to start the search process. In addition, in the first quarter of 2019, more than half of those buyers have been looking for a home for a minimum of three months.

If you are one of these prospective buyers in the Fort Collins area, we offer this one key piece of advice: Make sure you get approved for a loan before you begin looking at available homes. The main reason being that the home loan process takes time, and a pre-approval shows you and the seller how much home you can afford, and makes it more likely that you land the home you have identified as the ideal selection.

This process begins by getting one of two pre-approvals. There is a pre-qualification/pre-approval and an underwritten pre-approval. Let’s break down each.

Pre-Qualification/Pre-Approval
A pre-qualification/pre-approval can be handled over the phone as a quick conversation about your finances and employment. This is used to determine your eligibility. This doesn’t mean that you will for sure get the amount that is stated, because it was determined based on an honor system, not actual documentation.

Underwritten Pre-Approval
An underwritten pre-approval is one that requires documentation and proof of income/debts/assets, etc. It also comes with a credit check. Because of this, this type of approval is more of a guarantee that your loan will be funded. That is because it has been thoroughly reviewed and backed up by financial documents. These take longer than a standard pre-approval, however, because of the thorough nature of the process. What this does though, is give the buyer the ability to know how much of a house they can afford, what their monthly payment might look like and the level of taxes they would be looking at.

The benefit of going through this process, though it might not be as exciting as looking at home listings, is important to making sure the home-buying process runs as smoothly as possible for prospective buyers.

If you have any questions about the Fort Collins market, or the home loan process in general, make sure to contact one of our mortgage consultants today!

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