By Heather Morse
The pre-approval or pre-qualification process is one of the most crucial parts of purchasing a home and yet it seems to be the part many buyers are most hesitant about. What I haven’t determined is why they don’t want to see what they can be approved for but want to see houses they potentially can’t afford.
I think many people picture having to take time off from work to go meet with a lender, and they are nervous they won’t like what they hear. The truth is many lenders will have office hours on weekends or can help you over the phone or by email. In addition, lenders have enough knowledge that, if you can’t be pre-approved at that moment, they can help explain what needs to be done to get you a mortgage. This could be anything from saving more money, building your credit or paying down debts. If buyers are avoiding speaking with lenders until they feel they have enough of any of the above, they could be wasting time focusing on the wrong part. Even though it’s not fun to be told “no,” talking to someone with the expertise to get you where you want to go, sooner rather than later, could expedite your entire process.
No one should see homes without being pre-approved, and no seller should accept an offer that doesn’t include a pre-approval letter. The current market is very active, with many homes selling in under a month. The best buyers are prepared to write an offer before walking in the door. It is not uncommon for seller’s agent to ask buyer’s agent if the buyer has been pre-approved before allowing a showing. This protects the seller from not only disappointment, but also their time. Many sellers spend hours preparing their homes for showings after receiving showing requests and have to take time out of their lives to find somewhere to go during the showings. If you as a buyer haven’t completed the pro-approval process, it’s not polite to expect someone else to do all that work when there is a chance you can’t buy the house even if you want to.
The pre-approval process protects you as buyer—your time and energy are valuable too. A lender can give you details about the loans you have access to in less than 30 minutes if you have the appropriate documents in hand. Not everyone can be approved for an RD or FHA loan, or even a conventional loan. No one should plan to use the 0% down loan without knowing if their income qualifies, and no one should plan on a conventional loan without knowing if they have a high enough credit score. Buyers should have enough respect for themselves to not want to spend hours looking at homes just to fall in love with one and find out they can’t be approved for it.
Lastly, each loan type will have different requirements for each home being purchased. For example, you can’t use an RD (0% down) loan to purchase a home that needs rehab. So, when a buyer talks to a lender they should clarify what type of loan they have been approved for so they view only homes that meet the requirements. Depending on your situation you could be approved for a broad spectrum of loans and see any house you want, but this is a discussion you should have with your lender.
So, get pre-approved! Save time and disappointment—you won’t be disappointed when your dream home has been listed and you can write an offer without hesitation.
Heather Morse is a realtor with Green Tree Real Estate and can be reached via email..