Get Pre-Approved for a Loan Before You Shop for a New Home- The 4 C’s


Let’s face it, the real estate market is extremely competitive these days. The serious lack of well-priced inventory has turned purchasing property into a feeding frenzy. If you want to compete with other buyers, you need to shop in a price range that is within your budget and get pre-approved with a lender to gain a competitive edge. Here are some reasons getting pre-approved gives you that edge:

 – Shows the seller that you have made the effort to pull together information for the lender

– Shows the seller that you have an established relationship with a lender

– Shows the seller that you are more serious about the purchase

– Getting pre-approved helps speed up the loan process once under contract

If you want to feel even more confident, get a pre-qualification letter from a lender, which takes the approval process a step further. Knowing what you can afford before you shop will save you time and heartache. 

Here are Freddie Mac’s 4 C’s to determine how much you can borrow:

  1. Capacity- Buyer’s current and future ability to make payments

  2. Capital- Buyer’s cash reserves on hand as well as investments that can be liquidated quickly

  3. Collateral- The property you are purchasing will be held as collateral

  4.  Credit- Buyer’s history of paying monthly bills on time

After you obtain a pre-approval from a lender, then you can really start to shop with confidence. And remember, just because you got pre-approved with one particular lender, does not mean you have to stick with that lender. You should also shop for a loan. Rates and fees vary from one lender to the next. Once you’re under contract, do a quick comparison of a few lenders. Don’t take too long, once you go under contract, the clock starts ticking.

Spring is coming, get pre-approved now, and call me if you need a list of great lenders.

Randy Jimenez