Why Is It Important For Buyers To Get Pre-Approved First?/ Common First Time Homebuyer Mistakes

Buyers often wonder WHY they need to get pre-approved for a home loan and here are my top four reasons:

1. Not all Buyers qualify for a home loan, or they may be approved for a much smaller amount than anticipated.   I've had clients come to me and say I can afford X amount a month and according to the mortgage calculator online I can spend X amount on my purchase. Unfortunately what you can afford and what your lender will loan you are two different stories.

2. To make sure you how much home you can afford.   When getting pre-approved by a lender they will not only go over which loan programs you qualify for, but they will also give you an estimated monthly mortgage payment and closing costs based on your approved loan amount. With this information you can then decide how much of a home you can afford.

3. The Seller wants to see proof.   A majority of sellers in today's real estate market won't even entertain offers that are not accompanied by a Pre-Approval Letter or, if paying cash, Proof of Funds. By providing a pre-approval letter with your offer the seller will know you are not only a serious buyer, but a ready, willing and able one.

4. You need to know the terms of your offer.   When writing an offer you must know the terms you will be offering; the loan program you are choosing, how fast you or your lender can close along with whether or not you need/want seller contributions. Say your estimate for closing costs is around $10,000, but after your down payment you only have $3,000 left to spare. That means you will need to ask the seller to contribute $7,000 towards your closing costs in order to have enough to purchase their home. Seller contributions are not negotiated after you are under contract on a home, this is done during negotiations.


Looking at homes prior to getting pre-approved for a home loan is like putting "the cart before the horse." There are several steps to the home buying process and this is why you need to have a good Realtor.  When you need assistance, Give me a Call...

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5 Common First-Time Home Buyer Mistakes

1.  They don’t ask enough questions of their lender and end up missing out on the best deal.

2. They don’t act quickly enough to make a decision and someone else buys the house.

3. They don’t find the right agent who’s willing to help them through the homebuying process.

4. They don’t do enough to make their offer look appealing to a seller.

5. They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.

Source: Real Estate Checklists and Systems

If you are a qualified Homebuyer, now is the time to look for your dreamhome.  Read this Article to find out why: Real Estate Trends for 2011

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