Dear Home Buyer, here's why we ask if you're preapproved for loan

Have you ever encountered prospective buyers who demand that you show them houses first and if they see something they like, then and only then will they apply for a loan? And did these buyers become angry even hostile when you ask they they should be preapproved first?

 

There are very simple reasons why we ask buyers if they are already preapproved for a loan before we show them property

 

 

Buyers, Know Thyself.

 

 

 

Know if you qualify for a loan	It’s the first thing you should find out before you start looking for a house.   If you’re not paying in cash, can you get a mortgage?   If you can’t, then perhaps you’ll need credit counseling to get you to the point where you can qualify for a loan. Then you can plan to improve your credit, save money, prepare a timeline when you are ready to buy.
Know what kind of loan can you get	Conventional? FHA? VA?   Will you need home buyer assistance?   Does your local government offer home buyer assistance, and can you qualify?     In a competitive seller’s market, cash and conventional loans triumph. FHA/VA loans have stringent requirements that sellers may find challenging to comply with     If you can qualify for an FHA loan only, know that certain homes (some condominium complexes, for example) may not be FHA-approved. It will be a waste of time to look at homes only to find out you can’t get an FHA-loan to buy property in a non-FHA-approved development.
Know if you have enough money in hand	Do you have money saved up for both down payment and closing costs?     As of this writing, the minimum down payment with an FHA loan is 3.5% of the purchase price.     If you don’t have that amount, do you have other sources of money, such as a gift from a relative, a friend? Know that a gift is exactly that: a gift. Not a loan to be repaid.
Know what you can afford to buy	Having a target home value will give you direction on the budget range where you should focus your search. No sense looking at $500,000 homes if your budget is $250,000.     On the other hand, unless you are preapproved, are you underestimating your ability to buy a higher-valued home that may best suit your needs and your budget?
Know what monthly payment you’re comfortable paying	Even if you can afford a $500,000 house….will your monthly payments make you house rich but cash poor with no money for other things you enjoy doing?
Are you ready to write an offer?	Depending on the market, there are certain strategies when writing an offer.   To show you are serious about your intent to buy, your offer should include Preapproval letter from your lender showing you are qualified to write an offer on the property Proof of funds that you have the money available for your initial deposit, your down payment and your closing costs If you're not ready yet....become an informed Buyer. Know the market. Know the trends.

 

 

We may not ask you to “Show me the money”….

 

 

Rather, we will ask “Show me your preapproval letter!”