What if you find the perfect property, only to learn that you don’t qualify for the home of your dreams? If you don’t earn a loan pre-approval before you start looking, that could very well happen. Here, x reasons why a pre-approval is key to your home search.
1. Streamlined hunting
Most home buyers start out by browsing homes for sale online to get an idea of what neighborhoods and housing styles they like. If you don’t know what you can afford, you may be looking out of your price range and wasting your time. You also might be looking below what you would have qualified for and not getting the right home for your needs. If you begin the process by getting a pre-approval, you can sort by price, identify the right neighborhoods and find your dream home much faster.
2. Better results
The bottom line is that real estate agents prefer to work with homebuyers who have a pre-approval in hand for two reasons: They know the deal isn’t likely to fall through, and when they know what you want and what you can afford, they are able to do a better job of finding your dream home.
For example, if your agent doesn’t know what you can afford, he or she can only do a general search across several price ranges and may miss hidden gems. Meanwhile, if you have pre-approval, your agent knows exactly what to focus on and will be better able to suggest different neighborhoods, sizes, and conditions of homes to match your needs—making it easier to get you exactly what you want.
3. Higher acceptance rate
If you’re not pre-approved and you find a home you want to make an offer on, you’re taking a gamble. Real estate agents and sellers both are less willing to accept offers from a buyer without a pre-approval. Chances are they’ll go on to the next offer and you’ll miss out. If you’re pre-approved, however, you have more room to deal. Sellers may be more willing to lower the asking price, include appliances, cover closing costs or make other allowances to work with you.
4. Less stress
If you aren’t pre-approved, you could spend a long time looking for homes, wind up feeling like you’re not getting the best service from a real estate agent and then get turned down once you’re ready to make an offer.
All of this adds more time and stress to what should be a very exciting time in your life. If you’re pre-approved, you have less to worry about. You know you’re a qualified buyer, that there are lenders willing to work with you and you can feel pretty confident when making an offer.