Do you have your pre-approval yet? Have you gotten pre-approved yet? One of the very first questions you’ll hear from agents when you start your journey looking for a home. Why is that? Why are agents so obsessed with this?
- It’s because a pre-approval is the first domino that starts the whole homebuying process for you. It is the GO or NO GO test to determine if you’re financially capable of buying a home or not.
- Set your expectations for your home loan’s interest rate. Just because the lowest interest rate out there is currently X%, does not mean you will automatically get that. You must have a certain level of credit score as well as financials to secure the lowest rates. Keep in mind, rates can and will fluctuate as you conduct your home search, so don’t be surprised if rates change a little or a lot by the time you’ve found a home.
- Now that we know the estimated rate, we can determine the estimated monthly mortgage payment. This in turn also sets your buying power or purchase budget for the overall home. Meaning you now know what your maximum affordability is that a lender is willing to give you for a home purchase.
- Once you have your max affordability, now you can make all the important decisions on things like location, home style, condition, and features. Without having a clear-cut budget, you’re just guessing what you might be able to afford. Avoid the heartbreak of finding out that with your finances you can’t afford the home you want.
- Now you’ve found the ONE! And because you have your pre-approval ready to go, you are able to submit an offer right away. In today’s market, sellers are not looking at offers that don’t include a pre-approval. They are not taking the risk to accept an offer from a buyer who hasn’t been qualified.
For these reasons, having pre-approval is absolutely critical in your home search process. Can you look at homes without pre-approval? Yes. However, it is not a smart decision as you may end up finding the ONE, and then you have to wait for a pre-approval letter. You won’t be able to submit a strong offer on a home without it. Homes are going as fast as 1-2 days in the market still if it’s priced right and in a desirable location. Pre-approvals can take 1 week to 1 day. One day is too long and you may miss out on the opportunity to buy your home. So don’t chance it, get pre-approved and have the piece of mind of knowing all these things. If you have any questions, please let me know.