Home Buying in Cleveland>Question Details

Maureen Fran…, Real Estate Pro in Birmingham, MI

Why is it important to get a pre-approval from a lender when you start your home search?

Asked by Maureen Francis, Birmingham, MI Fri May 18, 2007

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Making a big investment like buying a home is stressfull enough, right Maureen? So it's a good idea to get your finanical 'ducks in a row' before you start searching. You might fall in love with a $200k home only to find out there is no way you can afford one over $150k. Additionally, you might find out you are approved for $250k but once you hear that number and go over your typical expenses (including those vacations you like to take), you might only be comfortable in the $175k range.
Secondly - sellers and listing agents for seller's expect a qualified pre approval letter to accompany a purchase offer. So you may as well be prepared in case you see a home and want to write an offer on it that night.
2 votes Thank Flag Link Fri May 18, 2007
Dear Maureen,
In additition to the wonderful answers previous to this, at times you find out that there are items on your credit report that aren't accurate. Usually it is just one or two items that might cause your lender to not give you the most favorable rate.

This will take some time. It is very important to get this done as soon as you realise you would like to purchase.

Chris Tesch
RE/MAX Bryan-College Station
Web Reference: http://www.ChrisTesch.com
1 vote Thank Flag Link Mon Jul 16, 2007
Would you want to sell your home to a buyer that does not know how or if he/she will get a loan?
0 votes Thank Flag Link Wed Jul 25, 2007
By not consulting with a lender before you write an offer you truly run the risk of causing problems in the deal. In a recent sale, where the buyer presented a pre qualification letter, he found out shortly after his offer was accepted that his lender couldn't do the deal without pmi. He then had to begin researching other lenders who could help him find a program that would work for him. A delay was not a problem with my sellers in this instance but when the sellers have another deal they are trying to put into place a week's delay can cause problems. Buying a home for the most part is being part of a chain of other deals and knowing you can depend on your financing and your lender to be able to follow thru with your part of it saves everyone alot of frustration. Being prepared is the safest way to avoid complications.
0 votes Thank Flag Link Wed Jul 25, 2007
If I could only give one reason, instead of many good reasons, it would be, to improve your negotiation strategy. Buyers who have their finances in order are much more attractive to a seller than those who don't.
0 votes Thank Flag Link Mon Jul 16, 2007
Certainly, you want to know what you can afford, and what you are comfortable with; but, for investors; to be ready and able to offer and close fast when a great deal is before you is an advantage for you in the competition to buy a great deal..
0 votes Thank Flag Link Sun Jul 15, 2007
Carole is so right.. it just makes sense for a buyer to be pre-approved before starting a home search. If a seller is choosing between two buyers for their home the prudent step would be to choose the one who can show he is qualified.
0 votes Thank Flag Link Sun May 20, 2007
Kaye Thomas, Real Estate Pro in 90266
MVP'08
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