Why Do I Need to Get Pre-Approved?

Reblogger Bree Long
Real Estate Agent with Keller Williams Realty

Attention all buyers! Let us not forget the first rule of buying a new home: you must get pre-approved for a home loan before you begin your home search.  So many home buyers overlook this important first step towards home ownership simply for the fact that they are wrapped up in the thrill of the hunt and the funpre-approval for a home loan of finding their dream home, with no thought given to the practical matters required to make it happen. Let's face it: we all want to walk through the threshold of our perfect home and feel that endorphin rush of warm-fuzzies as we breathe a sigh of relief and utter the words, "I'm home," ...just then Prince Charming rides up on his white horse with the seven dwarfs in tow. In other words, it's just a fairy tale until you figure out how you're going to pay the mortgage. I'd hate to see you heartbroken over the realization that the milion dollar home of your dreams will remain a dream since you can only afford a modest, $600k 'reality' home. If you are a serious buyer, then you must figure out your finances before you set yourself up for disappointment because of unrealistic expectations. Thanks to Cynthia Larsen for the well written reminder:


Original content by Cynthia Larsen CalBRE# 01433049

The chicken and the egg. Which comes first? When a potential buyer calls and wants me to show them a home, one of my first questions I ask is are you pre-approved for a loan? The reason for this question is simple. If I don't know what you are qualified for, I will have no idea what homes I can show you.

Buyers, I know this may not be what you want to hear, but you MUST get pre-approved for a loan before asking to be shown homes. Your pre-approval letter contains very important information.

  • The maximum purchase amount - It makes no sense whatsoever to show you homes that are above the maximum purchase amount you qualify for, unless the home is overpriced. That I can determine by looking at comparable properties that have recently sold nearby.
  • Whether you have chosen a direct lender or a mortgage broker - If you are using a mortgage broker, I cannot show you HUD-owned homes. HUD requires a pre-approval letter on a direct lender's letterhead.
  • The type of loan (Conventional, FHA, VA) - If you are qualified for anything other than a conventional loan, buying a condo or a "flipped" home can be very difficult and time consuming.
  • Loan and/or Funding Conditions - We need to talk about your ability to provide documentation the lender requires on a timely basis.

I understand that you might not want to get pre-approved until you find the right house. Or maybe you won't want to buy a house at all if you find out that $xxx,xxx can only get you a home in need of TLC in a less than desirable neighborhood.

We won't know that until you get pre-approved. In Real Estate, the pre-approval letter must come first. Let's call it the chicken. After that, we can go out together and look for that perfect egg.




© 2010 - All Rights Reserved

Cynthia Larsen
Broker/Owner - Safe Haven Realty

Sonoma County, California, USA
(707) 332-2560

Website   E-mail   Blog

Santa Rosa  --  Petaluma  --  Rohnert Park --  Sebastopol  --  Penngrove  --  Cotati


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Dana McGary
Crye-Leike Champion Real Estate Group, Searcy, Arkansas - Searcy, AR
Realtor - White County, Arkansas

Good Post!  I have always gotten my share of "Looky Lou's".  That is what Open Houses are for.  I welcome Looky Lou's to my Open Houses.  But, it's not fair to the sellers to schedule a personalized showing of their home to buyers who have not been pre-approved. 

Oct 02, 2010 10:07 AM #1
Jim Patton
Century 21 M&M - 209-404-0816 - Turlock, CA
Realtor - Stanislaus & Merced county Realtor.

Great Post Bree - I learned a long time ago to ask that question before I show anyone a house.  No sense in wasting my time or their time.

Oct 02, 2010 10:11 AM #2
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