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Financial Watch | March 2024

Financial Watch | March 2024

March 20, 2024

How to Set Yourself Up for Homebuying Success in 2024

Rising mortgage rates and home prices created a challenging market for home buyers and sellers last year. Many homeowners with low-rate mortgages were reluctant to sell and trade up to higher interest rates, which negatively impacted available housing inventories, further driving up home prices as demand outweighed supply. This perfect storm of high interest rates, rising home prices, and low inventory had a disproportionate effect on first-time home buyers, leaving homeownership out of reach for many. However, with mortgage rates coming down from their highs last fall, many housing market experts are optimistic that rates will drop further in 2024, creating opportunities for both buyers and sellers.1

Consumer sentiment may be taking a turn as well. Even as interest rates inched up at the beginning of the year, more prospective homebuyers may be willing to take a chance to reach their goal. One recent study indicates that 62% are waiting for prices and/or rates to fall before buying a home, down from 85% six months ago. Meanwhile, 54% of homeowners said they would move if they found a more affordable area to live in, even if it meant paying a higher interest rate on their mortgage, and half said they would sell if they found their dream home.2

If you’re among those considering a move in 2024, it’s important to put yourself in the most advantageous position in your homebuying journey. That begins with understanding how the mortgage prequalification and preapproval processes can help set you up for success.

While the terms prequalification and preapproval are often used interchangeably, they’re separate processes that serve different purposes. Prequalification is must faster and less arduous than the preapproval process, since you are not required to provide documentation verifying the financial and employment information you report.


In the prequalification process, your lender will provide an estimate of how much you may be able to borrow based on information you report about your finances, including your income, assets, debt, and any outstanding loans. While lenders may check your credit score, this “soft” check will not affect your score. Prequalification can be a good choice if you’re just getting started in your homebuying journey, because it gives you an idea of what size mortgage you may qualify for, which can help you narrow down your search. It’s also a good option if you expect your financial situation to change in the near future. For example, if you’re looking currently for a new job, expecting a raise or promotion, or anticipating a change in marital status.


In the preapproval process, the lender seeks to determine your creditworthiness and the likelihood that you will be able to pay back the loan. You can expect your lender to conduct a detailed review of your financial condition, including your income, employment, and credit histories. While preapproval takes longer, it carries more weight with sellers due to the comprehensive application process and lets them know that you’re a serious buyer when you’re ready to make an offer. In fact, many sellers may require a prequalification letter before accepting an offer, especially in highly competitive markets where bidding wars are common.

Prepping for the outcome you want

Whether you’re seeking a prequalification letter or preapproval for a mortgage loan, it pays to review your finances ahead of time. That can save you valuable time and help you secure the best possible loan terms and rates, which can potentially save you tens of thousands in interest over the life of your loan. Consider taking the following steps before starting the prequalification or preapproval process:

  • Gather your most recent financial statements. This can help ensure you don’t forget to list any accounts or outstanding credit or loan balances. If you’re married, this should include all accounts held by you and your spouse, both individually and jointly.
  • Check your credit score. Credit score requirements vary based on the type of loan. Most lenders look for a score of at least 620 to qualify. However, with a Federal Housing Administration (FHA) loan, a score of 500 or above may be acceptable.3
  • Review your credit report to ensure it’s accurate. If you notice any errors, report them as soon as possible to the appropriate credit bureau(s). Each of the three major credit bureaus, Equifax, Experian and TransUnion, has a process for reporting and correcting errors.
  • Keep your most recent tax returns handy. You won’t need copies of your returns to prequalify for a loan. However, during the preapproval process, lenders typically want to see your personal tax returns for the most recent two years.
  • Compare rates and lenders. Before choosing a mortgage lender, it’s important to compare loan types, terms, and rates. Many lenders and financial institutions, as well as the Consumer Financial Protection Bureau ( offer online loan estimator and comparison tools to help you find the best fit for your needs.

If you’re thinking about buying or selling a home in the months ahead and have questions about how this decision may impact your strategy or cash flow, call the office to schedule time to talk.

1)Rothstein, Robin and Basile, Caroline, “Housing Market Predictions For 2024: When Will Home Prices Be Affordable Again?”, 22 FEB 2024,
2)Olick, Diana, “Homebuyer demand pushes mortgage applications higher, even as interest rates inch up again.”, 24 JAN 2024,
3)Wells, Libby, “What credit score is needed to buy a house?”, 10 JAN 2024,

This information was written by KRW Creative Concepts, a non-affiliate of the Broker/Dealer.

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