Do NOT be caught Dead without your Pre-Qual!!
Here are five reasons why getting a pre-approval letter should be your #1 Priority
Most home buyers know they should get a mortgage pre-approval letter from a lender before they begin seriously shopping for a home. But the reasons for this advice aren't always clear. Here is some of the reasoning behind the advice:
- You’ll know how much you qualify for. Interest rate will be the number one determination of how much of a house you can afford. If you only want to spend $1000/month for a mortgage your interest rate will determine how much of a house you can buy. If you qualify for 4% interest rate then you can look for houses in the $200K range but if you qualify for an 8% interest rate then you can only look in the $130K range- and believe me- that is a HUGE difference when it comes to houses! This is how frustration and disappointment can begin so make sure you know what interest rate you qualify for, how much your down payment will be for the loan you pick out (yep- there are different types of loans too).
- Most Sellers will not even let you look at their home without a pre-approval letter. Imagine being a family selling a home; Always having to keep the home in excellent condition for potential buyers, interrupting daily life every time a realtor calls to show the house. Now imagine you get about 3-4 realtors coming through your home on a daily basis. They get excited at the prospect of selling their home…only to realize that a realtor brought people through their home- interrupting their lives for some who wasn’t even qualified to buy it?! Imagine being those people. I’m sure you would want everyone coming through your house to at least be “able” to purchase it. So homeowners have gotten smart and stopped the looky-loos by forbidding anyone to come through without a pre-qualification letter, wouldn’t you? You can’t test drive a Mercedes without proving you have the ability to buy one and a house is a far bigger ticket item than a Mercedes. So most agents can only show you vacant homes which severely limits what you can and can’t see. What if your dream home is for sale and you can even view it because you don’t have your pre-qualification letter? Don’t be caught without one!
- You will get the brush off from some agents. By having a prequalification letter, it shows the agents that you are serious and ready to have them work hard for you. Agents won’t spend their valuable time showing houses to people that may or may not qualify.
- You won’t be able to make an offer on your dream home. The market moves very fast in the world of making offers- especially if you are in the average house hunting range of 180K-300K. Houses in today’s market have multiple offers on them and the good ones get snatched up quickly. You need to be ready and you cannot make an offer on a house unless you have a pre-qualification letter. Buying a house isn’t like window shopping- you have to be able and willing to move on your perfect home. If not, someone else will grab it up right from under you!
- The contract must be presented along with the pre-qualification letter. You have to have one anyway! The seller’s agent will not even present an offer without one and why should they? Everyone else has one- you should too. So if it’s something you have to have in order to buy your home- make it your #1 priority to get your pre-qualification letter. So if you spend the time looking and you find your dream home- I’m sure you’d want to be able to make an offer on it right away.
You can contact your bank, credit union or check out the local mortgage lenders. Always ask your real estate agent who they usually use. Why? Because they have already done the homework! Most likely they have found a tried and true loan officer who closes deals and has a special relationship with the agent. The agent isn’t going to recommend you to a bad loan officer- Hey- it’s their reputation on the line! Loan officers and Real Estate Agents are not allowed to exchange referrals or money so you know your agent is using a loan officer strictly off his or her merits. Ask your agent how many escrows they have done together. Your agent will be more than happy to give you all the juicy details about their loan officer. They want to make sure your escrow goes through- or they don’t get paid so it’s a win-win! So if they have a relationship with a loan officer who the realtor trusts to close the deal and leave with happy clients- sometimes your best bet is to go with the agent’s lender rather than a loan officer the agent isn’t familiar with. So when your realtor asks you if you are paying cash or getting a loan…you can say…I already have my pre-qualification letter…let’s go buy my house!