BUYERS: The importance of getting a pre-approval letter:
After hiring a reliable Realtor, one of the most important steps in the home buying process is getting a pre-approval letter. Even as you’re searching for a home, having a pre-approval letter will give you the freedom to make a move the moment you’re ready.
Here are some more reasons you will need the pre-approval from the very beginning:
- It is important to go ahead and start shopping around for the best rate as soon as possible. Once you find a low rate, the lender may be able to lock you in. So even if the rates go up over the next couple of months, you are still locked in at the lower rate.
- Getting this done in the beginning of the process will allow you to fully understand the entire cost of purchasing a home. Your lender will provide you with a “truth in lending” document that discloses all of your loan and closing costs associated with your purchase.
- Realtors only work with pre-approved buyers. Getting this done right away shows your desire to move forward. Once you have it in writing, your Realtor will bend over backwards to assist you in the search of your dream home. A good Realtor will work in the evenings and weekends to assist you and accommodate your work schedule.
- If you are selling your home, you will need pre-approval before you even list your home for sale. I’ve seen sellers get a contract on their home, then get a pre-approval letter, only to find they cannot afford the price range they anticipated. As a result, the seller often has to get out of an accepted contract because they cannot afford.
- The pre-approval is necessary so that you know what price range you are qualified to purchase. Once you have an informed, accurate price range, your Realtor will set you up on a daily email list of the homes that fit your criteria and budget.
- Many buyers believe that because they have good credit, they will have no problem getting approved, only to find that their debt-to-income ratio isn’t sufficient. Also, many people have great jobs but their credit report harms their ability to purchase a home. It is important to know what we are dealing with in the beginning so that the lender can assist the buyer in doing what is necessary to repair their credit.
- It is the listing agent’s responsibility to only allow showings to pre-approved customers. Therefore, if you don’t have that letter you may get denied access to your dream home.
- Once you find the perfect home, you must have a pre-approval letter attached to the offer. Buyers will not look at offers without the approval letter.
- Waiting until the last minute to get a pre-approval can delay the buying process. Many homes sell in the first few days they are listed. If you have to wait on a pre-approval, someone else may get an accepted contract before you are able to write an offer.
- If you go ahead and get a pre-approval, even though you have not yet sold your home, you may write a contingency offer on another home. The pre-approval will state that the approval is contingent on the sale of your home.
Good luck in finding your dream home!
For a homebuyer’s checklist, click on the “Buyers” tab on our homepage.