5 Reasons You Need a pre-approval!
One of the first questions an agent is going to ask you when you start your home search is “Have you been pre-approved by a lender?”
Typically there are three responses that I get to that.
The first one is a blank stare and/or panic – “Whaaaat?”
The second is suspicion – “I don’t know really want to do that yet.”
And the third is any agent’s favorite answer – “Yes!”
It’s important to know that your agent isn’t trying to trick you – they are trying to help! Here are five important reasons that you need a preapproval before you start your home search.
1️⃣ SET REALISTIC EXPECTATIONS
Getting pre-approved really helps you set and manage your expectations. Searching for your home is so much fun. But here’s the thing, just because you feel comfortable buying a $500,000 home doesn’t mean that that’s what a lender is going to approve you for. So you could be taking a look at these $450k to $500k homes only to be told that you’re approved for $250,000. What do you think the odds are that you’re going to find something you love in that $250K price range after comparing them to a $500K home?
2️⃣ CREATE A CREDIT ACTION PLAN
If credit is an issue, it gives your lender an opportunity to create an action plan to help maximize your purchasing power. Look, I get it. Stuff happens. You get behind on your bills, that old college credit card crept back up again… but unless you actually apply and have a professional looking at your credit, you don’t always know what you need to fix and how to fix it. Having a lender pull that information and look at it helps you figure out how you need to move forward to get be able to maximize your purchase power.
3️⃣ SO YOU CAN SHOP AROUND
In a hot market sellers are getting multiple showings (and offers) in the first 24 hours. Some sellers want to make sure that the buyers that are walking through their home are already pre-approved. If that’s the case, your agent isn’t going to be able to get you in to see that home if that is a stipulation that the seller requires.
4️⃣ SO YOU CAN JUMP ON YOUR DREAM HOME
There’s nothing worse than walking into a home and finding that it is in the perfect location, it has the perfect amount of space, it’s the perfect price – everything’s perfect, and you’re not able to make an offer as soon as possible.
5️⃣ SO YOU CAN CLOSE QUICKLY
When you are pre-approved, chances are your lender has a variety of paperwork that you had to submit to get that pre-approval. All of that paperwork along with some additional documents that they’re going to request is needed to get the underwriting done for your loan. So with that being said, having all of that stuff already submitted to your lender is going to make the process go quicker. Now, why does that matter? Because at the end of the day, time is of the essence. When you have multiple offers, it comes down to conditions and someone who can close within 30 days, looks a lot more attractive as opposed to someone who may take 45+ days to close.
So those are the top five reasons by you really need to make sure to get pre-approved before you start your home search. If you have additional questions about the lending process or getting pre-approved, I have some of the most amazing lenders on speed dial that are able to help answer your questions.
In addition to that, I have a home buyer’s guide that has a whole section on lending basics. You can download my FREE home buyers guide HERE.
Happy house hunting!