Get pre-approved as the first step in your home-buying process. If your credit isn’t strong enough, there are things you can do to repair it. Likewise if you aren’t earning enough, it is better to know that up front, rather than waste time and energy finding the perfect home, only to realize you can’t get it.
Know what you can afford and make sure you are getting the best loan possible. There are many programs to choose from, so you will need to learn about your options. Of course loan programs change daily, so the loan you’re approved for during the pre-approval stage might not be available when you apply, but it should give you a good idea of what is available.
Securing a home loan can be a long and tedious process. You may spend weeks or even months, hunting down paperwork, filling out forms, ordering past statements, etc. Know that you can qualify for a loan, before you spend your time on these tasks.
The time you spend setting up the pre-approval will make the loan application process faster and smoother.
Most Realtors require you to be pre-approved before they spend their valuable time showing you homes. They want to know what you can afford, so that they can show you appropriate homes. If you aren’t eligible for a loan now, but will be in a few months, the Realtor will most likely show you homes and help you prepare.
Don’t let them show you homes which are out of your price range. Stick to the numbers that will allow you to get a good loan.
Sellers will also want to see a pre-approval letter before signing a contract with you to purchase their home. It is the nightmare of every seller that they will tie up their home for months with an unqualified prospect. A seller wants a fast sale.