Do I Need a Mortgage Pre-Approval?

WHY You Need a Pre-Approval

 

 

If you’ve thought of buying a home, you’ve probably heard that one of the very first items on your ‘to do’ list needs to be obtaining a pre-approval from a lender.  Not a pre-qualification.  Some of the more common reasons on why a pre-approval is necessary involve making sure a credit profile is up to par, making sure your scenario meets lender guidelines, and giving sellers a warm & fuzzy feeling when you walk into their home.  These reasons are

Mortgage preapproval is necessary for the best homebuying experience
Getting a pre-approval is non-negotiable if you’re serious about buying a home, especially in a competitive market.

important, but what about the “perfect” buyers?  The ones with modelesque credit, tremendous income, lots of 0’s on the end of their assets, and an overall profile that has bankers knowing at their doors.  Well, they need a pre-approval, too.  A full and complete one.  But WHY?  We’ll get there.

 

 

The Basics

 

If you’re not pre-approved and you’re not a “perfect” buyer, you’re kind of wasting everyone’s time (we say “kind of” to be kind).  But think of it this way – you’re asking a real estate professional to take time to meet you, learn your wants and needs, and to spend time finding the perfect place for you to call home.  THEN, they’re meeting with you to tour these homes, hear why you don’t think they’re so perfect, and go back to find more listings for you after getting feedback.  Nobody’s complaining, as that’s part of an agent’s job, but would you do all of that with 0 chance of ever seeing a dime of compensation?

 

 

Let’s face it though, you’re a decent person so you probably care about your real estate professional that’s working their butt off for you, but what’s really important is you.  Do you want to go out, fall in love with a certain price range, style of home, or area, only to find out you’ve got no chance at buying, or a few years to go before you’re going to be able to buy?

 

 

In a hot market, the time between putting in an offer and agreeing to close is often one way to gain an advantage in a multiple offer situation.  Even if you CAN get preapproved, there may be some work that can be done along the way to improve your rate and terms – with a short escrow or contract period, you may not have the luxury of that time.  Wouldn’t it be nice to have some extra time to consider these things that could potentially save you thousands of dollars.  With a pre-approval, you’ll have that time.

 

 

If you made it this far and are still thinking “But I’m PERFECT!” this next one’s for you:

 

 

Let’s say you’re in a hot market and are working with an agent that’s agreed to show you homes sans pre-approval.  You find THE ONE.  This home is nearly as perfect a house as you are a buyer.  The listing agent demands a pre-approval letter when an offer is submitted.  “No problem” you think, and you call your Mason Mac loan officer to work on the pre-approval.  Your loan officer gets back to you in what seems like no time at all, your agent gets ready to send over your offer, annnnd just like that, it’s gone.  While you were getting your pre-approval, someone (less perfect of a buyer, no doubt) came through with the pre-approval they obtained before they looked at the home, and made the seller an offer they couldn’t refuse (even if the offer was less desirable than yours may have been).   You just lost the home of your dreams because you didn’t have a pre-approval.

 

The Bottom Line

 

A full pre-approval protects everyone – your lender, sellers, your buyers agent, and most importantly – you.  Is it an inconvenience?  Not if you’re serious about buying a home.  If anything, it just gives you a head start by providing your lender with documentation they’ll need anyway once you find a home.  If your real intent is to buy a home, a pre-approval prior to looking at homes is a must.  Especially in a hot market, you don’t want to miss out on a chance at your dream home because you don’t have your pre-approval completed.

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