One of the most important reasons to be PRE-APPROVED early on in the home buying process is to make sure you are comfortable with the monthly payment and the amount of money you would be required to bring to the closing table.  Loan programs and guideline changes are happening so rapidly today that a Pre-Approval on a particular loan program from 6 months ago may not be applicable today.Many lenders have been caught in a tough place over the past 6-12 months by providing a borrower or Realtor with a PRE-APPROVAL letter when the borrower really isn't PRE-APPROVED.  If a lender simply asks you what your credit score is and how much money you make and says, "you will have no problem being approved for a loan of this size" you should be aware that this is more of a PRE-QUALIFICATION and not a PRE-APPROVAL.  There is a big difference.

Buying a home is an emotional purchase.  It is also the largest purchase people usually make.  It is much more comfortable to make an offer on a home if you understand exactly what your monthly payment would be for a particular price range.  There is much less stress involved when making an offer on a home when you understand what your payment is and that you are already PRE-APPROVED.  Consider looking at homes in your area in the $250,000-$300,000 price range only to later discover that you can only be pre-approved for homes in the $125,000-$175,000 range.  Homes at the lower price range could be more difficult to be excited about if you become emotionally attached to a home in the higher price range.

There are many other important reasons for being PRE-APPROVED early on in the home buying process, but I think you will get a good idea about this topic from the information I've provided.

Please do not hesitate to let me know if you have any questions or concerns about what I have discussed.  I look forward to the opportunity to help.

Written  by:

Jon Potvin at First Horizon Home Loans