The 4 Most Important Reasons to Get Pre-Approved Before House Hunting

So you’re thinking about buying a house in the next few months and you’ve started looking at homes online. While you may be tempted to ask your REALTOR® to take you out for showings, your first priority should be getting a mortgage pre-approval letter from a lender.

What is a pre-approval letter?

When you contact a lender about getting pre-approved, they will request financial documents and pull your credit report. Using this information, the lender will determine if they may be able to qualify you for a loan. If so, they will issue you a pre-approval letter which states how much you may be able to borrow and what your interest rate could be.

Homebuyer tips: 

• Get your financial documents in good order. Buyers are often intimidated by the pre-approval process, so it’s less stressful if you know where to find everything.

• Expect surprises. Especially if you haven’t pulled your credit report (or it’s been a while), you may get questions from your lender about past activity or large purchases.

• Start early, but not too early. The pre-approval process can take anywhere from days to weeks depending on your financial situation, but many pre-approval letters expire within 60-120 days so wait until you are serious about home shopping.

• When shopping with multiple lenders, try to apply within the same time period as hard credit pulls within the same 14 day period are typically counted as a single credit inquiry and will not hurt your credit score as much.

Why should I get pre-approved before house hunting?

There are a number of reasons to get pre-approved before starting your home search, but these four may be the most important:

1. Timing is critical in a competitive market - you want to be ready to go when you find the house of your dreams and that means having a pre-approval in hand. 

2. Narrowing your search to homes you can afford saves you time and heartache. Nobody wants to fall in love with their dream home only to find out it’s entirely out of their budget.

3. Sellers and agents will view you as a serious buyer - an offer without a preapproval letter is less likely to be considered, especially in a multiple offer situation.

4. Your home purchase will likely close faster than average. 

Think of your pre-approval letter as the maximum price point for your home, but also consider your budget when deciding on a comfortable payment amount. Most buyers are pre-approved for more than they are actually comfortable spending. 

Ready to start your home search? Contact your Cedar Haven Real Estate Group agent today!