Do I Need a Pre-Qualification?
There’s one question we hear from almost all first-time buyers: Do I really need a mortgage pre-qualification before I go shopping for a home? The answer is yes, if you want your home-buying experience to as positive as possible. Here’s why.
Why You Need a Pre-Qualification
Buying a home today is way different than it was just 10 years ago. Before the housing bubble burst, it was much easier to get approved for a loan. Some lenders were even willing to take on high-risk borrowers. So since then, getting a mortgage application approved got a little harder for everyone.
Just like you, sellers and listing agents are having to adjust. With stricter rules for borrowers, sellers can’t just jump into a sale with the first person who makes an offer. They want buyers who will be able to complete the sale and get financing. When a buyer makes an offer but later isn’t pre-qualified for a mortgage, everyone loses. The buyer doesn’t get the house and the seller has to try to find another taker.
Since not all buyers will be pre-qualified for a mortgage, there’s a big incentive for sellers to choose an offer from a buyer who is. The pre-qualification tells sellers that the buyer’s financial situation has been checked.
Winning Over Sellers and Getting the House
If sellers and agents want to work with buyers that have pre-qualification, that means you’ve got to get pre-qualified. After all, you want to be prepared and successful on your home search.
You don’t want to miss out on that starter dream home by showing up without your pre-qualification letter. If you’re seriously considering a particular home, make it known that you’re serious and that you’re pre-qualified for financing.
But before you start looking at homes, pre-qualification in hand, a couple tips:
- Read your pre-qualification letter carefully. What amount are you qualified for? You should look for homes priced equal to or less than that amount.
- If homes in your area go fast or get multiple offers, look for slightly cheaper homes that leave you room to haggle or raise your offer if needed.
- Start shopping for your home right after you get your pre-qualification. Pre-qualification letters are usually offer the terms for 90 days. That’s only a few months to find the right home, make an offer, and initiate a sale.