Friday, April 3, 2020 / by Jodie Steele
The most frequent push-back I receive from buyers is when I tell them I’m going to have my lender call to get pre-approved. Maybe the buyer doesn’t want their credit pulled. Maybe getting pre-approved will make it all too real and they are just not quite ready for that yet. There could be a number of reasons getting pre-approved is a little scary. However, getting pre-approved should always be your first step. Here’s why!
First, getting pre-approved will tell you if there is some work to be done on your credit. Buyers may need to clean up their credit a little before purchasing a home. A good lender can help you with this or direct you to a financial advisor to help get you on track.
Second, to simply see what you will be comfortable with for your monthly payments. I tell all buyers to have a conversation with their lender about what monthly payments will look like. For instance, what does a $250,000 loan vs. a $500,000 loan look like. You may be approved for $500,000, but are more comfortable with what your monthly payments would be for a $400,000 loan. Just because you are approved for a certain amount does not necessarily mean that should be the amount of loan you get.
Simply put, shopping for a home before getting pre-approved for a mortgage is like walking into the mall without your wallet. Why would you want to waste time looking at homes that may not be in your budget? Worse, you could fall in love with a home that you cannot afford. Don’t assume you know what you’ll be pre-approved for. I have come across many buyers who thought they were approved for more than they actually were. Many factors play a role in how much loan you can take out. It’s always best to talk with your lender.
Lastly, with such a competitive market buyers should always be prepared to make an offer the same day of viewing homes. Of course, this may not happen, but it is important to be prepared. You never know when you will find your dream home, and not wasting any time when you do is crucial.