Why do you need to get pre-approved for a home loan before you go looking at houses? The best reason for getting pre-approved before looking at homes is that it just makes sense to know what you can afford before you get into proper buying mode. It will give you confidence and peace of mind in the home buying process and ensure that you don’t get in over your head. It will also directly impact the time you spend looking at homes, because you won’t be wasting your time looking at houses you can’t afford, making the entire process much smoother and easier for you.
Buyers Spend Time Looking at the Right Homes
It’s completely frustrating and depressing for buyers to spend time looking at homes in a certain price range to later find out that they can only get pre-approved for a lesser amount. It’s hard to look at lower priced homes after you’ve been looking at nicer, more expensive homes. Buying a house or condo is a process of elimination. If you eliminate the houses out of your price range right from the start, you will be able to spend your time looking at houses that are true contenders that deserve your full attention. Buyers often think when they start the home buying process that they need to look at two dozen homes to “get an idea” about the market, when if fact that will do nothing, except confuse you. At some point you’ll get “house overload” and the home buying process will become a chore rather than the happy experience you had in mind. You’ll save yourself time and energy by eliminating houses that are out of your price range right from the start. Energy that can be better used concentrating on the houses that do fit your criteria.
Excellent Credit? Getting Pre-Approved is Still a Good Idea
Even buyers with excellent credit who know for a fact that they’ll have no problem qualifying for a mortgage should go through the pre-approval process before looking at homes. Shopping for a home is no different to any other purchase. You’ll have a number in your head that you want to pay every month. Does that number align with what the loan will cost you? Since both interest rate and closing costs will impact that, there’s really only one way to find out and that’s to talk to a lender. Online calculators help, but they don’t factor in everything and if they are off by a couple of hundred dollars that’s a couple of hundred dollars more you’ll be paying every month. Don’t you want to know that before you sign on the dotted line?
The Pre-Approval Letter in the Negotiating Process
A pre-approval letter WILL help when it comes to writing an offer. It sets the stage for a positive first impression. Think of the presentation of your offer the same way you think of a job interview. The seller is someone you really want to impress. An impressed seller will be more willing to negotiate. I don’t think this needs too much explanation. Put yourself in the sellers shoes. The media tells us day in and day out that lending standards have changed and that getting a loan is not as easy as it used to be. Would you want to negotiate with someone who’s never spoken to a lender and has no idea how much house they can afford? My guess is probably not. That’s how sellers feel. They don’t know you. It’s not personal. They just want to be sure you’re the “real deal” before they accept an offer.
Shopping for a Home is the same as shopping for any other commodity. Whether it’s groceries, luxury items or a holiday in the Caribbean you don’t go spending money without having a plan on how you’re going to pay for it. So why would you do that when you’re buying a house? Bottom line, it’s just the right thing to do for your own peace of mind!