5 Reasons You Need a Preapproval

One of the first questions an agent is going to ask you when you get started on your home search is "Have you been preapproved by a lender?"

Typically there are three responses that I get to that question. The first one is a blank stare and or panic - "What?"

The second is always suspiciously, "I really don't want to do that yet." Lastly, and the best answer is "Yes!"

It is important to know that your agent is trying to help you and not trick you. Here are five important reasons that you need preapproval before you start your home search.

---

Number One: Set Realistic Expectations

Getting your preapproval letter really helps you set and manage your expectations. Searching for a home is so much fun, but the thing is just because you feel comfortable buying a $500,000 home doesn't mean that that's what a lender is going to approve you for. You could be taking a look at these $450,000 to $500,000 homes only to be told that you're approved for $250,000. What do you think the odds are that you're going to find something you love in that $250,000 price range after comparing them to a $500,000 home? Setting expectations is always a good thing to do in the beginning!

---

Number Two: Create a Credit Action Plan

If credit is an issue, it gives your lender an opportunity to create an action plan to help maximize your purchasing power. I get it, stuff happens. You get behind on your bills, that old college credit card crept back up again, but unless you actually apply and have a professional, looking at your credit, you don't always know what you need to fix and how to fix it. Having a lender pull that information and look at it helps you figure out how you need to move forward to be able to maximize your purchase power.

---

Number Three: So You Can Shop Around

In a hot market, which we are currently in, sellers are getting multiple showings and offer(s) in the first twenty-four (24) hours! Some sellers are getting offers with the homes never being seen! Sellers want to make sure that buyers are walking through their homes that are already preapproved. If that is the case, your agent isn't going to be able to get you into these homes if that is a stipulation that the seller requires.

---

Number Four: So You Can Jump On Your Dream Home

There is nothing worse than walking into a home and finding that it is the perfect location, the perfect amount of space, the perfect price - everything is perfect, and you're not able to make an offer as soon as possible. Having that preapproval letter will help you be able to make the offer when you do find that perfect home!

---

Number Five: So You Can Close Quickly

When you have that preapproval letter in hand, chances are your lender has a variety of paperwork that you had to submit to get that preapproval letter. All of that paperwork is needed to get the underwriting done for your loan. So with all that, having all of that stuff already submitted to your lender is going to make the process go quicker. Now, why does that matter? At the end of the day, time is of the essence. When you have multiple offers, it comes down to contingencies and someone who can close within 30 days, looks a lot more attractive as opposed to someone who may take 45+ days to close.

---

So those are the top five reasons why you really need to make sure you get your preapproval letter before you start your home search. If you have additional questions about the lending process or getting your preapproval letter, I have some of the most amazing lenders on speed dial that are able to help answer your questions.