A note on why getting pre-approved is so important
In a time not so long ago, there was flexibility in home searches. You could tour homes, think on whether you could see your family there, get pre-approved, and go under contract after a week and not have to worry about someone coming in and scooping up your dream house. You could even submit an offer, and then get your pre-approval. There was no rush. Well, those days are no more. The last three years we have seen an extreme demand for home buyers, and all time housing inventory lows.
You may be fortunate enough to not have to get financing, but you will still need to prove you have the funds. I always recommend contacting your bank, and having them write a letter for you that says you have “x” amount of funds to purchase. You can also submit your bank account statement, but just make sure you black out any important and personal information.
Pre-Qualification vs. Pre-Approval
When it comes time to talk to a lender, there are two types of letters they can write. A pre-qualification, and a pre-approval. So, what’s the difference? A pre-qualification is just a generic rough estimate of what you can afford, pretty much based on what you told the lender. A pre-approval takes more time, and the lender will pull your credit as well.
Here’s why you should get pre-approved before touring houses
1. Competition
The market is moving fast right now, and a pre-approval will keep you competitive and ready to make an offer when you find the right house. Most of the time, if you submit the same exact offer on a property, and the only difference is a pre-qualification vs a pre-approval submitted, they will go with the offer with a pre-approval.
2. You’re Serious
You shouldn’t be looking at homes if you have no intention to purchase. A pre-approval means that you are ready to buy, and have made the extra effort that is needed to purchase a home.
3. Budget
By having a pre-approval in hand, you know exactly what price point you can look at houses. Without the letter, you can guesstimate the amount you can afford, but by having a lender sit down and go over the details with you will make you a more informed buyer.
Ultimately, having a pre-approval is vital to starting your home search. It means you are ready, willing, and able. It is an extra verification step, and gives Sellers a peace of mind that the people coming into your home are qualified and not just touring their home. It is also good for your Realtor, because they do not get paid until the transaction closes. So, that letter makes a world of a difference!
If you aren’t sure where to go for your pre-approval letter, send me a message and I can connect you with an amazing, and local, lender!
–Amber Fleck is a Realtor with Nest Shenandoah Valley. As someone who chose to plant roots in the Valley, Amber loves to welcome people to the area and share all of her favorite hidden gems. Because, ultimately, she believes you should love where you live!