Do I Really Need A Pre Approval Letter

Do I Really Need A Pre Approval Letter

So what’s the deal? Why can’t I look at houses without a pre-approval letter from a lender? I want to wait until I find the house of my dreams before I talk to the bank. After all I’m just looking and I can get a mortgage whenever I want, no problem.

Famous last words.  Do you even know what a pre-approval letter really is? It is NOT the same as a pre-qualification.  Pre-approved means you have a written commitment from the lender for a mortgage. You’ve provided information about your income and debt and the lender has done their due diligence to make sure you can actually afford to buy a home. There may be a few other things to provide once you find said home but rest assured it is worth the little bit of extra effort.

Now you ask, but why is it such a big deal to the REALTOR®? Actually, there are several, but a big one is REALTOR® Safety.  What? I’m sure you understand that a REALTOR® takes a big risk every time they agree to show a house; after all, most of the time, they are agreeing to meet someone they don’t actually know in a house that may be vacant or at the very least when home owners are not there.  Think about that, would you want to go meet a perfect stranger in an empty house at the drop of a hat? But how is a pre-approval from a lender going to keep the REALTOR® safe?

If a buyer has been pre-approved they have been through processes with the lender and provided information to the lender like social security numbers, job history and more. While the REALTOR® doesn’t have access to that information – someone does and most people who are up to no good don’t want that kind of information available – to anyone. 

Another good reason is that it provides proof of the ability to get financing. It lets the REALTOR® know you’re serious about your search and it helps narrow the search saving you both time and frustration. With a pre-approval, the agent will have a better idea of your price range as well as being able to advise you on taxes and other things that may affect your monthly payment.  There’s no point in wasting your time showing you house’s that are out of your price range – not to mention the time of the seller and the agent. It’s only common sense and common courtesy.

Being pre-approved may also strengthen your negotiating ability. In today’s market, there may be multiple offers on the same property. If you were the seller which offer would you accept; the one who is pre-approved or the one that hasn’t even started the mortgage process? AND, there are sellers who require a pre-approval letter; meaning they won’t even consider an offer from someone who’s not pre-approved.

Buying a home is probably the biggest purchase you will ever make, wouldn’t you rather start that process knowing exactly where you stand, what you can afford and that you are working with an agent who knows what they are doing. 

So don’t be offended if one of the first few questions your REALTOR® asks you is about pre-approval. All the good ones will. 

I would!

Kelly Pangburn Headshot
Phone: 231-519-1872
Dated: October 19th 2018
Views: 355
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28 South Maple Street, P.O. Box 8
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