Get Pre-Approved Before House Hunting

Get Pre-Approved Before House Hunting - coffee with candis carmichaelThe biggest piece of advice I can give you as a real estate agent: get pre-approved before house hunting. I know you’ve heard it a million times. Many agents won’t start your home search without a copy of your pre-approval letter, but there is a legitimate reason for this.

I was asked about this by a first-time home buyer. I understand that you don’t want to run credit, start providing personal information and involving a lender without knowing you’ll find a home you want in the next 90 days. But wouldn’t it be worse to find something you fall in love with only to realize you won’t be able to get the loan to afford it? Or another buyer swoops in (armed with a pre-approval) and contracts it before you can even put in an offer?

Reason #1 – You know you’ll get a loan

Many sellers are requesting that a pre-approval letter accompany any offers submitted. By jumping over the hurdles before you start searching, you’re a step ahead. You’re showing that you solidly have financing lined up. This makes your offer more attractive to sellers because they know that you are less likely to cancel a contract due to inability to obtain a mortgage.

Reason #2 – You know how much house you can afford

This is one of the biggest reasons to get pre-approved before house hunting. How disappointed would you be if you fell in love with the perfect home, then found out you couldn’t get a mortgage to buy it? It’s quite a downer and I’ve seen it happen. What’s worse: after that, it feels like nothing compares and that you’ll never find the right one again. If you know what you can afford right out the gate, then this won’t be an issue.

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Reason #3 – You will already have an idea of the “nitty gritty” details

By starting the process with getting pre-approved before house hunting, you can take a little more time to research the commitment you’re making. Namely: you can take some time and vet the lenders in the market. You can find the right lender with the right rates over the right term with the right product to stretch your dollar the farthest. By picking your money source before asking them to fund it, you’ve taken control of the situation to make sure your final arrangement is in the “Goldilocks Zone” – just right! You won’t be rushing and at the mercy of the last-minute scramble. 

I always tell folks to start early, like, as soon as you know that you are ready to buy. Go ahead and get your pre-approval done. It’s a long-term investment you’re thinking of. You’re buying the house and, yeah, you’re gonna get a mortgage. Keep in mind that whatever loan you get, you’re going to be paying interest on that loan for the next 15 to 30 years. So you want to take your time and pick the right fit. It may not seem like a lot, but 1/2% can make a huge difference over the years as to how much you’re really paying an interest.

Financing your home purchase should be a pre-thought, not an after-thought. So don’t leave it to the last minute to get pre-approved. Do it before house hunting! 

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