WHY IT'S IMPORTANT TO GET
One of the most exciting times in your life will come when you realize the dream of homeownership. You will take to the internet to search houses, drive by signs, attend open houses, ask the advice of a friend and work with a Real Estate Professional.
It is not our intention to make you feel bad when asked if you have been pre-approved for a home loan. Answers vary but majority will say “I do not want my credit pulled until I find a house or I know I have excellent credit, you have had a bad experience in the past or frankly that is none of our business.”
The truth is that the past 24 months have shown considerable lows in housing inventory and those that are listed are selling for top dollar. This is cycular, Seller’s market, so it definitely can change and sway us more towards more of a Buyer’s market. However for the sake of this example what separates all of those offers, yes we are seeing multiple offers coming in, are those candidates who have a pre-approval letter.
Why the importance? A good pre-approval letter will state that your credit has been pulled and found satisfactory; additionally it should give you some idea of home value and payments to expect. On the other hand a pre-qualification letter in laments terms simply states that based on the information that you have provided, normally without documentation, that you should be approved for a loan. This is not allowing you to come from an area of strength as you negotiate to purchase your new home.
Aligning yourself with reputable lenders will be important. Do they have the knowledge to navigate you through the process? Do they offer programs to help you with down payment assistance if needed? What type of loans do they have to choose from? Examples include FHA, VA, Conventional, New Construction, Land, Rehab, USDA and a host of others. How is their overall communication and availability to you and your needs while shopping? Will this continue once you find your new home? Is it OK to shop around? Absolutely! I do not think that you would buy the first car that you ever test drove, so why should such a major investment require any less research and due diligence on your part.
All of this may seem overwhelming but as you build your team to help you through the process they should be able to answer questions and make you feel at ease. Your team will consist of Real Estate Professional, Lender, Title, Home Inspector, Home Warranty, Relocation firm if applicable and so many more that have your best interest in mind. It should be an enjoyable time to purchase a home. Others have done it, so why shouldn’t you? Take a deep breath and relax and enjoy your journey on the way to owning your new home!