One of the things I always ask when I am talking with a potential home buyer is if they've been preapproved. Typically there are three responses that I get to that. The first one is yes, they've been preapproved. Awesome, great. The second is a blank stare. What?! And the third is skeptical and noncommitta: 'I don't really know that we're ready for that yet.' And that's okay too.
I thought maybe it be helpful if I broke down five important reasons that you should be getting a preapproval letter before you start your home search and maybe help you understand why you keep getting that question asked by different real estate agents.
NUMBER ONE: SET REALISTIC EXPECTATIONS
Getting your preapproval letter really helps you set and manage your expectations. Searching for your home is so much fun. But here's the thing, 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. So you could be taking a look at these $450k to $500k homes and then they tell you that you're only approved for $250,000. What do you think the odds are that you're going to find something you love in that $250K price range after comparing them to a $500K home?
NUMBER TWO: CREATE A CREDIT ACTION PLAN
If credit is an issue, it really gives your lender and opportunity to create an action plan to help maximize your purchasing power. Look, I get it. Stuff you get behind on your bills, that old college credit card crept back up again. But unless you actually apply and you 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 really look at it helps you figure out how you need to move forward to get be able to maximize your purchase power.
NUMBER THREE: SO YOU CAN SHOP AROUND
Here's the thing, especially in hot markets like Charleston, where homes come on the market and they get multiple offers right away. Some sellers want to make sure that the buyers that are walking through their home are already preapproved. So if you don't have a preapproval letter, first of all, your agent isn't going to know what price range to show you homes in. They're also not going to be able to get you in every home if that is a stipulation that the seller requires.
NUMBER FOUR: SO YOU CAN JUMP ON YOUR DREAM HOME
There's nothing worse than walking into a home and finding that it is in the perfect location, it has the perfect amount of space, it's the perfect price - everything's perfect, and you're not able to go ahead and make an offer as soon as possible. Number five so that you can get close, quick girl.
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 along with some additional documents that they're going to request is needed to get the underwriting done for your loan. So with that being said, having all of that stuff already submitted to your lender is going to make the process go quicker. Now, why does that matter? Because at the end of the day, time is of the essence. When you have multiple offers, a lot of times it comes down to contingencies and someone you 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 by you really need to make sure to 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.
In addition to that, I have a home buyer's guide that has a whole section on lending basics. This guide is available for you to download for free at The Official Charleston Home Buyer's Guide. Talk soon & happy home buying!!!