While shopping for a home may seem like the correct first step, serious homebuyers need to start the process in a lender's office, not an open house.
Potential buyers benefit in several ways by consulting with a lender and obtaining a pre-approval letter.
First, they have an opportunity to discuss loan options and budgeting with the lender. It’s important for you to know your price range and be comfortable with your payment.
Second, the lender will check on your credit and alert you to any problems. If there are any glitches, you’ll have time to straighten out any issues before it causes any problems.
Third, you will learn the maximum you can borrow and have a better idea of your price range. However, you should be careful to estimate your own comfort level with a housing payment rather than immediately aiming for the top of your spending ability.
Lastly, home sellers expect all buyers to have a pre-approval letter and are more willing to negotiate with people who have proof that they can obtain financing.
By taking the time to start off the buying process properly with a loan preapproval, you’ll know you are looking in the right price range and are equipped to move quickly if you need to. By having your preapproval letter ready, you can avoid losing out on the home of your dreams.