Why is it important to get approved for a mortgage before home searching?

The first step for buyers who will buy with a financed purchase is to get pre-approved for a mortgage before you find the home you want to buy, and before you even go see properties.

This is especially important in today’s market, when properties can attract multiple buyers in a matter of days (sometimes hours) on the market!

The buyers who are ready to make their offer, are the buyers who will be in the best position for a seller to feel most comfortable choosing when reviewing all offers. Written documentation for both financed offers (Lender Pre-Approval Letter) and cash offers (Proof of Funds Documentation) should be in your agent’s file early in your home purchasing pursuit.

I recently received an offer for one of my listings from an agent who had emailed the offer with “all the parts and pieces” of documentation to present to the seller. In the meantime, another agent who also had interested buyers notified me that her clients decided to submit an offer for the same property.

She also let me know that the offer “would have to be submitted without a prequalification letter.” She said that her clients were working on getting in touch with their lender, and she would send the letter “later.” She asked if the seller could respond to her clients offer without the prequalification in hand. My response: the seller will need proof that her clients are “ready, willing and able to make this purchase.”

The moral of this story is to get all documentation in hand prior to submitting an offer.

You may be a qualified buyer, but without the written “proof,” how can a seller have the confidence to respond to your offer? If you were the seller, wouldn’t you place more credibility with the buyers who backed up their written offer with the proper documentation?

Be prepared, or you stand to lose the opportunity to buy the property of your dreams. Position yourself to be ready, because you never know when that property will show up. Do not wait to get prequalified!

If you are unsure who to call, your Realtor should be able to connect you to reputable lenders who will advise you of the price range to target. This is a critical step that should be determined before any assumptions are made about how much you can or cannot afford to finance.