Why Get Preapproved Before You Start Your Home Search

Starting your home search without a preapproval is like saying you want to buy a home, but have no money.  Yet, the vast majority of homebuyers miss this first step in the process. No need to worry, your Realtor will redirect you to where you need to go. Realtors have great connections with lenders who they know and trust to do a good job for you. As I’ve said before, an ideal transaction involves a nice communication triangle between the buyer, Realtor, & the lender. 

 

So what is a preapproval?

A preapproval is when a lender verifies the borrower’s financial documentation to figure out exactly how much they are willing to lend the borrower. Some of the documents they will need to do this are pay stubs, W-2’s, tax returns, and bank account statements.  Being preapproved is not to be confused with being prequalified. A prequalification is which is based on verbal information given from the borrow to the lender, with no document verification. Therefore it doesn’t have the same weight that a preapproval does.

Getting preapproved doesn’t commit you to getting a mortgage, spending the full approved amount, or even using the lender that preapproved you. It just solidifies the price range you are realistically able to look in, and prepares you for an offer when you find the right house. 

So to sum up the two simple {but big} reasons you need to get your  preapproval before you start you home search…

  1. You won’t waste your time looking at homes you can’t afford, or you will be pleasantly surprised to find out you can afford more than you thought.
  2. Your offer won’t get accepted without a preapproval. There can be exceptions to this, but it’s highly unlikely that a seller will accept an offer from a buyer who is not already preapproved.

 

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