Wednesday, October 11, 2017 / by David Mcduffee
If you are anything like most buyers, once you decide to buy a home you will likely rush out to open houses and get an agent to start showing you lots of homes. I don’t blame you.. Seeing homes is the best part of buying real estate. I want to warn you, however, that this could lead to some major missteps in the home buying process and make the experience far less smooth and enjoyable than it could be. In order to have the best home buying experience and get the home of your dreams, I urge you to talk to a lender and get pre-approved for a home loan before seeing even one home. Here’s why:
Knowing exactly what you can afford helps to manage expectations
Knowing exactly what you can afford before shopping for a home allows you to manage your expectation of what type of home you will be buying. If you are shopping for homes in the $400k price range and find out you can only get pre-approved for $300k, you are going to be highly disappointed when you have to shop at a much lower price range. Starting your search in the right place is very important in finding a home that meets or exceeds your expectations.
Ability to move fast when you find the right house
In a seller’s market (like the one we are currently experiencing in Portland), homes will often sell within one or two days of being listed for sale. If you want your offer to be taken seriously, it must be submitted with a pre-approval letter so the seller knows you are actually qualified to buy their home. Even if you offer more money or better terms, the seller isn’t going to risk taking their home off the market for someone who cannot prove they can buy their home. It can take 24-48 hours to get pre-approved, and by then the house of your dreams may already have an accepted offer.
Finding the best lender for your situation
Not all lenders are created equal. Some lenders can provide better terms on VA loans, some have better jumbo loan packages and some work well with those who have a lower credit score. Whatever your situation, it is best to talk to multiple lenders to be sure that you are getting the best loan for your situation. Don’t put yourself in a situation where you are working against a deadline to get pre-approved or it may cost you a lot of money in the long term.
Getting pre-approved is free and does not obligate you to buy a home
This one is pretty self-explanatory, but just because a lender does a pre-approval letter for you, it does not force you to work with that lender or even buy a house for that matter. They can also run credit and down payment scenarios for different loan types to help you plan your financial situation for the best outcome when you buy a home. The only downside is your credit takes a very small hit when you perform an inquiry with a lender, but it is well worth it.
Now you know that when a realtor tells you to get pre-approved before seeing houses, it is for your own benefit. They want you to save money, have your expectations met or exceeded and get the house of your dreams. If you have any questions about getting pre-approved, would like to talk to one of our preferred lenders or discuss buying or selling a home give us a call at 503-332-1289 or submit an inquiry through our website. Happy house hunting!