Many people hesitate to speak with a Lender or get Pre-Approved before they start house shopping. But should you start the Pre-Approval Process first? Below are a few reasons it may be wise to consider your mortgage loan before speaking to an agent or seller:
Setting a realistic price point saves time & reduces opportunity for disappointment
Let's say you find the house of your dreams. It's everything you want and need in a home and you decide to go for it. You set up a showing with your agent and decide to put in your offer. At that point, you could go for Pre-Approval and discover you cannot be approved for the loan needed to secure the house. Opportunity lost. Dreams dashed. Time wasted. It's best to not just know your preferred price range, but also to know what your financial capabilities are.
Being pre-approved increases your chance of getting the house you want, when you want it
Being Pre-Approved, for whatever amount, increases your chance of getting the house for which you put in an offer- especially in today's hot market. If you are going up against another home buyer who is Pre-Approved and you are not, chances are great they will get the home. In any situation being Pre-Approved shows the Seller or agent you are serious about buying and have the funds readily available.
Speaking to a Lender helps prepare you for unexpected costs
Some Sellers will pay some or all of the closing costs, but in most cases you will have to pay 3-5% of the home's cost. Getting an idea upfront of the fees, taxes and inspections will help you prepare by getting a loan not just for the home's price but also for closing costs.
Having a financial baseline in mind is smart (and necessary), but finding out how you much really can afford is wise and provides standing when you find a home for which you want to put in an offer. Consider speaking with a lender before you begin your home search. If you have any questions about the process, ask us!