Many home buyers are anxious to start their search in the real estate market and forget the crucial pre-approval process. It is natural to be eager about buying a new home, but it can be detrimental to look for houses before getting pre-approved. Here are 5 reasons why you should get pre-approved BEFORE house hunting.
You will save everyone’s time.
It doesn’t make sense to look at houses when you don’t know what you can afford. While you may have an idea of the price range you want for a home, you need to ensure that you will be approved for that amount. Looking at homes takes a lot of valuable time, in fact, many realtors won’t work with buyers until they receive a pre-approval letter.
You won’t fall in love with homes out of your price range.
There is nothing worse than looking at houses you won’t be able to afford. Once you start looking at homes in your price range you will be completely disappointed. You will have you heart set on the higher end features and more expensive locations. Get pre-approved first so you can realistically manage your expectations and emotions while looking at homes.
Sellers will take you more seriously.
When buyers present an offer on a home it is advisable to include a pre-approval letter with their offer. Sellers will know that you have already contacted a lender and you are capable of being approved for a mortgage loan.
You aren’t risking your earnest money deposit.
If you enter into a contract first and contact your lender second you can risk receiving approval on a loan. It is possible that you won’t receive pre-approval for that loan amount or at all. You then lose the earnest money deposit that you have with your contract and some of your pride as well.
You will save time once you are under contract.
Once a sales contact has been ratified it is a race to the closing date. There is a limited amount of time to schedule appraisals, inspections and gather documentation. Already having a pre-approval with a lender will allow you to know what documentation you need to collect beforehand and assure that an underwriter has already reviewed your application.
Next time you are in the market to buy a home, remember these 5 reasons of why you should get pre-approved first. It saves everyone time and will help you to avoid heartache and headache in the real estate market.