The Importance of a Pre-approval

Which came first, the chicken or the egg? Do you believe in the theory of evolution or the big bang theory? Is climate change real? Do cats or dogs make better pets? Which fast food restaurant has the best french fries?  If you’re buying a house, should you get a pre-approval before or after you find your next home?  Although many of these topics may be debated endlessly with no clear answer, I can state with absolute certainty… get your pre-approval BEFORE finding a house.  Let’s talk about the buying process.

Believe it or not, Spring is right around the corner and with that comes the peak buying/selling season.  If you’re planning to be in the market in the Spring, now is the time to do your homework.  And your first homework assignment is getting a pre-approval letter. Like anything else in life, you can find a pre-approval online. However, I strongly recommend contacting a LOCAL lender.  You want to work with someone who knows that Morgantown is NOT a suburb of Richmond, Va.  After a few ‘qualifying questions’, your local lender should be able to provide you a pre-approval quickly. Know that just because you may be pre-approved for $300,000, that does not mean you need to shop for a house for $300,000. Find a home that fits your needs and budget, knowing that $300,000 is your max.

Obtaining a pre-approval accomplishes three (3) goals in the home buying process. First, and most obviously, it helps you determine your buying power. A pre-approval will help guide you (and your REALTOR®) through search criteria for the home you can comfortably afford. If you’re used to paying $1600 rent, understand that rent rates do not necessarily equally translate to that of a mortgage payment.  You may be pleasantly surprised what $1600 per month on a mortgage can buy you. Second. When it comes time to write your offer, the pre-approval letter will serve as a supplemental document to your offer package.  If you and your REALTOR® shop for houses before obtaining a pre-approval and you find the one you are ready to write an offer, it may be too late if you don’t already have your pre-approval in hand. Which leads me to the third purpose of the pre-approval. The seller wants to see it.  The market continues to be extremely competitive. If a desirable house hits the market, it could be only hours before it goes under contract and is no longer available. If you enter into a competitive environment with multiple offers, the seller(s) will want to see that your offer is supported by a trusted (local) lender.

Just as I boast the importance of working with local professionals, your local lenders certainly top the list. Contrary to traditional banking hours, real estate lenders do not work traditional bank hours. They are available as needed and are quick to help you accomplish your home buying goals. Until next week, love where you live.  And if you don’t, contact your local REALTOR®.

Brian Haufe, 2022 MBOR President