I always get the question. Should I speak to a lender before looking at homes?
In most scenarios, it makes sense for home buyers to get pre-approved for a mortgage before you start looking at houses. There’s a certain logic to doing things in this order. After all, the pre-approval process helps you focus your search on the types of properties that you can afford, based on the lender’s willingness to lend.
With that being said, the pre-approval review process is no substitute for old-fashioned budgeting. You should still take a good hard look at your income and expenses to determine how much of a monthly payment you can afford. The pre-approval process comes into the picture later, when you’re actually ready to start shopping for a home. You should already have a budget in mind when you move onto this next stage.
There’s another good reason to get pre-approved before house hunting. Sellers (and their real estate agents) will give your offer priority over any other offers that have not been reviewed by a lender yet. In other words, they will take you more seriously as a potential buyer.
It makes perfect sense, when you think about it from the seller’s perspective. The last thing the seller wants to do is accept an offer from someone who is not qualified to get a mortgage loan. You negotiate back and forth. You agree on a price. You take the house off the market (maybe) and wait around for the home inspection. And then you find out the buyer can’t even qualify for a loan. That’s a waste of everyone’s time. So it’s a good idea to get pre-approved before looking at houses, or as early on as possible.
It’s also worth noting that pre-approval is not the same as the final approval. You can still be turned down for a mortgage loan after you’ve been pre-approved by a loan officer. It happens all the time.
“Pre” means that it occurs on the front end of the mortgage process. In order to get a final approval from the lender, you must also go through a rigorous underwriting process. The underwriter will review your loan application and your credentials to determine if you are an acceptable risk for the lender. Only when the underwriter gives a “green light” will you receive a final approval.
The lender I entrust with my clients is Shay Gaytan www.tsmlending.com/sgaytan Feel free to reach out to her with more specific questions about your unique situation.