It happens daily. I will be talking to a potential buyer on the phone and I ask my standard question: “Have you talked to a bank about getting prequalified?” Sometimes the answer is yes. But often times, the answer is, “Not yet. But, it won’t be a problem.”
It may very well not be a problem for a buyer to get prequalified. But what if it is? And what if you think you can afford more than you can? What if something is haywire on your credit? There could be so many things that a buyer doesn’t realize and that’s why getting prequalified is one of the first steps in the home-searching process.
In the video below, Alex Monticello talks about the importance of getting prequalified.
Alex mentions, “In this market if you go and see a house that you like that’s priced right, often times, it moves quickly. So we recommend getting a prequalification early before you see any houses. That way you’re prepared if you walk in the door and it’s the house you want to make an offer on.”
Getting prequalified before you look for a home helps you focus on what you can actually afford. Buyers may have a general idea of their price point. But it is important to know exactly what you can afford so you aren’t looking at houses that you ultimately will not be able to buy.
Getting prequalified also lets the realtor and the sellers know you are serious. A buyer cannot make an offer on a home without the prequalification letter. Some buyers say they would rather wait until they find a house they like, and then they can get prequalified. While this may seem like a good idea – the problem is that in a competitive market – you could actually lose out on a house to another buyer if you don’t have a letter. Sometimes it might take a day or two to obtain the letter, and by then someone else could have made an offer and you could lose the house. It’s better to have the letter so you are well prepared.
An important aspect in the prequalification process is to find a reputable local lender. Alex says, “Local lenders have an established reputation in the community. They sometimes have more affordable products. It often makes the transaction way more efficient and less stressful for our clients, and ultimately has a higher likelihood of succeeding when we process their loan locally.” Taking the time to research banks and find a reputable lender will ultimately put you in a stronger position when it’s time to make an offer.
Spending the 20-30 minutes to get prequalified in the beginning of the home buying process can make all the difference for when you actually find your dream home.
