You're Wasting Your Time If You're Not Pre-approved
Last night I happened to catch part of an HGTV episode about first time homebuyers. In this particular episode, the young buyer was confidently saying that he was going to start looking for a condominium to buy and when he found what he liked he would go to a bank and get pre-approved.
(Screech!!) This is where the brakes get applied!
Let's rewind and fill in what his agent should have explained up front:
1. If you're not pre-approved you won't have any idea how much money you will be able to borrow. How will you know the price range of homes you can consider?
2. When you find your home and submit an offer, the listing agent will tell you, "The seller cannot respond to your offer without a pre-approval." A homeowner is not going to enter into a negotiation to sell their home until they know you can afford to buy it. If you are submitting an offer in a multiple bid situation, your offer isn't going to be considered because you're not pre-approved. Talk about setting yourself up for potential aggravation!
The preapproval process involves providing a lender with your income information including recent pay stubs, tax returns, and information about your assets. The lender will also check your credit score. Based on this information, the lender will determine how much money they are willing to lend you. They will issue you a preapproval letter stating this information. The letter is usually valid for 3 months. This process does not cost you anything. It also does not "lock" you into using this particular lender when you actually apply for your mortgage.
What a preapproval letter does is to put you in a position of strength both for your own knowledge and for the sellers'. Don't waste your time starting your home search without one!
Give me a call at 781-253-3385 if you are looking to buy a home in Sharon MA, Canton MA or the surrounding towns. I'll be glad to put my real estate experience to work for you!
Wishing you a happy, healthy and peaceful New Year!