Why does my agent want me to get pre-approved before looking at homes?

A website called “The Lighter Side of Real Estate” takes this on in a recent post naming six reasons. They are six very good reasons. Read on.

In the post on the site, they liken shopping for a house without a mortgage pre-approval to “walking into a grocery store without a wallet. You may have the desire to buy, but you lack the ability.”

A mortgage pre-approval is a written letter from a lender stating that you are able to borrow a certain amount of money based on your income, employment, asset verification and credit standing.

Why should I get it (besides the brilliant analogy above?)

  1. It means more than a “pre-qualification.” A pre-qualification letter many times is given from just a verbal verification of information — so credit hasn’t been pulled, income, assets, etc haven’t been verified. This means that it doesn’t really carry as much weight or importance as a pre-approval, where the verification of those items has been done to give the letter.
  2. You should be able understand how much house you really can afford. Going through the pre-approval process can help you truly comprehend how much a home will cost — up front money like downpayment, potential upfront private mortgage insurance, your monthly payments, insurance, taxes, etc, while still being able to live your life.
  3. When you write an offer, it gives a seller confidence in you. Pre-approval letters do mean more than pre-qualification letters to sellers, and for good reason.
  4. Along the same lines as #3, it could potentially help your negotiating power. A stronger pre-approval letter with more loan conditions met could help you in negotiations over someone who has not gone through the full process.
  5. It will save time once you get a home under contract. You will still have to provide a lot of additional information to your lender, but the information you have already provided will help speed the process along.
  6. Most agents won’t work with you without one. I will use the words from the post from Lighter Real Estate as to why: “Think about it: when you hire an agent, he/she will invest countless hours showing you homes over the course of your house hunt. If you were in their shoes, wouldn’t you want assurance that your hard work would lead to a favorable outcome for both you and your client?”

I work with a few lenders who I trust implicitly to get my clients into the homes of their dreams. Please contact me if you want to buy a home in Baltimore or the surrounding areas. One of my lenders will work with me — and you — to help you home!