Is it necessary to be pre-approved before I start looking for a place to own? What are the consequences?

Asked by Anita Garg, Cornlea, NE Sat Jul 4, 2009

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Therese L Korahais’ answer
Therese L Ko…, Agent, Bayside NY 11361, NY
Tue Jul 7, 2009
Hi Anita, It is only necessary if you plan on having your offer accepted-otherwise you are only throwing out numbers without any backup. . I'm sure you must have an idea of what you can afford-now get that verified on paper-For a COOP purchase-monthly mortgage cost+monthly maintenance+any special assessments+personal bills = total needed a month just for your apartment not inlcuding living expenses.
( your credit score drops everytime you run your credit-do it once and get a copy if you want to shop around)

The consequences is that anything you see that you like will most likely go to someone else by the time it takes you to get your pre-aprproval.
1 vote
Belal Mohd, Agent, Rego Park, NY
Sat Jul 4, 2009
Dear Anita:
Not always! While pre-approval does help in most cases, it may work like a PLACEBO in some cases also. Too many placebos and your sugar goes up! You need to know the answer of the second part of your question - CONSEQUENCES. It is true when you shop for Houses, Condos, Foreclosures, Short Sales etc. most sellers would ask to see a pre-approval. But Coops are very different. Most Coops have their own guidelines and you need to know them first. Pre- approval won't help there.
Before you shop for pre-approval, which is actually shopping for mortgage, do your home work first. You know your income, your expenses, obligations. You can run your own credit report for free through various websites. Look for incorrect, even seemingly harmless informations that need to be corrected. There are websites from credible lenders and other helpful resources where you can calculate your buying power by entering your financial information. You do not need to give out your Social Security, Date of Birth, Address for that. At best, put your Name and phone and/or e mail.
Once you are serious (not just looking), put yot priorities in order of 1. Afford 2. Need 3. Want, not the other way around. Do some research on locations. Browse property ads, see what's out there. Look beyond price - closing costs, taxes, utilities, possible fixing costs etc. etc. There are websites to help you with that also. Once you know what you really want, start looking. You do not have to have a pre-approval in your pocket to look at a property. Those who don't want to show you without a pre-approval, don't bother. After you have narrowed down your search, you may go for pre-approval, to credible lenders only. Ask people you know who bought recently and are happy with their lender/broker.
Consequences - you will have to give out quite a few personal informations to someone who may or may not be your final choice. Not all sellers and agents accept pre-approval from everybody. Multiple pre-approval can affect your credit score. You will get calls / e mails from those who gave you pre-approval even if you are not ready. An inflated pre-approval will give you a false sense of affordability and you may spend more simply because someone said you can.
If you want to discuss this further you can call me at 917-763-2260 or e mail me at Don't worry, I will not bombard you with calls, e mails. Thanks. - Belal Mohd
1 vote
Marge Bennett, Agent, Fort Myers, FL
Fri Jun 4, 2010
Absolutely, there are so many benefits of being pre-approved,
1) You know how much house you can buy so you don'tl look at and fall in love with one that is out of reach.
2) your Realtor and sellers will take you seriously
Many Realtors will not even show property without the assurance that the buyer can acturally buy,.
3) As stated by others, it makes the buying process go much quicker and smoother.
0 votes
Ron Rovtar, Agent, Boulder, CO
Thu Jun 3, 2010
Hi Anita:

I may be splitting hairs here, but looking requires no pre-approval. However, once you have identified a home that you want to buy, the seller may (and often does) want to see a pre-approval or some other strong evidence that you can close the deal. At what point you go out and get the pre-approval is up to you, but the act of making an offer and negotiating can be pretty hectic and it often is best to have the pre-approval ahead of time. Otherwise it can cause delays and, in the worst cases, provide another buyer with the time to put in a competitive offer.

0 votes
realestate_l…, Agent, Fresh Meadows, NY
Thu Jun 3, 2010
Hello Anita,
Talk to a mortgage professional that can council you .It really should be your priority. Ask her or him how long after you identify a property you want to buy, Will it take before approval and then a mortgage commitment. It’s really great that you’re taking the initiative by asking questions. After you do this you will be better able to decide what’s right for you. What another poster said also rings true, Although this is what is considered a buyer’s market properties are still staying on the market only a few short days before going to contract, I see it all the time and what I tell you is verifiable. These are the best property and the most desirable, either because of price, style, location and appeal or a combination. these buyers were ready to buy and they were rewarded for doing so. It kind of reminds us of the old adage that the early bird catches the worm. I could give you tons of other tips but if I try to do it here it will confuse you. Good luck and if you have any more questions I believe this forum has my contact info. Best of luck to you and your quest.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Mon Jul 6, 2009
Yes, you should have a pre-qualification or pre-approval--you should know what your budget can handle before shopping to buy.

0 votes
Patricia Apo…, , Tampa, FL
Sat Jul 4, 2009
Dear Anita,
In today's market, I would definately say that you need to get your pre-approval befor you start looking. First off, this will tell you what you can afford to look at. No sense falling in love with a $200,000 home when all you can afford is $150,000. Secondly, with all the short sales and REO homes on the market, no lender will take an offer seriously unless it is accompanied by a pre-approval letter. it just makes your offer and intentions appear more serious as you have taken the time and concern to take the first step. Since many properties are accepting multiple offers, consider it a MUST!
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0 votes
Gail Gladsto…, Agent, 11743, NY
Sat Jul 4, 2009
Anita, not only do you want to get pre-approved (NOT pre-qualified), you should get a Lender Pre-approval and ask for one that contains only two contingencies; a contract and an appraisal on the house.

Not only will this tell you exactly how much you can afford (and DON'T spend everything they approve you for), having this pre-approval/pre-commitment will set you up on the same level as a cash buyer and makes you serious.

Unless a buyer has a full pre-approval, I won't even show them any homes....with a pre-approval it shows you are serious.

To answer your question more precisely, if you go out looking and are not ready to buy, when you find the home of your dreams, someone else will purchase it while you're still trying to find out if a bank will mortgage you.
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0 votes
Marge Bennett, Agent, Fort Myers, FL
Sat Jul 4, 2009
Since most sellers, even the "regular" ones, not the banks, are requiring a pre-qual with any offers, I say yes. It also helps you and your agent to look in the right price range.
Marge Bennett
Sellstate Achievers Realty Network
Marge Works Harder...for YOU!!!
0 votes
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