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When you’re ready to find a home, the last thing you want to do is limit your possibilities. Dream big, right? But you’d be totally bummed if you found a perfect location, only to learn you don’t qualify for the home of your dreams.
If you don’t obtain a loan pre-approval before you start looking, you might actually prevent yourself from finding—and buying—your dream home.
Here’s why:
1) Streamlined Hunting With Pre-Approval
Most homeowners 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 may also be looking below what you would have qualified for and not getting the right home for you.
If you start off by getting a pre-approval, you can sort by price, identify the right neighborhoods, and find your dream home much faster.
2) Better Results From a REALTOR®
The bottom line is this: REALTORS® prefer to work with home buyers who have a pre-approval in hand for two reasons.
First, a REALTOR® knows the deal isn’t likely to fall through, and second, when they know what you want and what you can afford, REALTORS® are able to do a better job of finding your dream home.
For example, you told a REALTOR® you want a historic home, but the asking price for these homes varies widely. If they don’t know what you can afford, they can only do a general search across several price ranges and may miss hidden gems.
On the other hand, if you have pre-approval, a REALTOR® would know what exactly what to focus on and would be 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 for Buyers With Pre-Approval
Once you find the perfect home, the next step can go two different ways depending on a pre-approval.
If you’re not pre-approved and you find a home you want to make an offer on, you’re taking a gamble. REALTORS® and sellers are less willing to accept offers from a buyer without a pre-approval. Odds are, they’ll go on to the next offer—and you’ll miss out.
However, if you are pre-approved, you have more room to haggle. Sellers may be more willing to lower the asking price, include appliances, cover closing costs or make other allowances to work with a pre-approved buyer.
4) Less Stress With Pre-Approval
Finally, skipping this step can wreak havoc on your stress level.
If you aren’t pre-approved, you’ll spend longer looking for homes. You may not feel like you’re getting great service from a REALTOR®. You may 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.
On the other hand, if you’re pre-approved, you have less to worry about: you know you’re a qualified buyer, you know there are lenders willing to work with you, and you can feel pretty confident when you make an offer.
