What If I Wait Until Next Year to Buy a Home?We recently shared that national home prices have increased by 6.7% year-over-year. Over that same time period, interest rates have
Why Wont My Agent Show Me Homes Without A PreApproval
At the risk of sounding mean or unappreciative of business, real estate agents ask prospective Home Buyers for a Mortgage Pre-Approval before running out to tour homes. Why do I need to have a Mortgage Pre-Approval you ask? Because a professional agent will always look out for their client’s best interest. In fact, it borders on malpractice if an agent does not ensure their client is ready and able to make an offer as soon as they find the “perfect home”.
As a Realtor in the competitive Northern Virginia Real Estate Market, I speak to Home Buyers every week who "just found the perfect home on the Internet!"! And, of course, they want to take a look as soon as possible before someone else buys it.
As a Realtor who loves their job...as much as I enjoy showing homes, especially the “perfect home”, there’s an important FIRST STEP to the home buying process that cannot be skipped.
A Mortgage Pre-Approved from a reputable Lender is the official start of the home buying process.
Do I need a Pre-Qualification Letter or a Mortgage Pre-Approval?
There’s an important difference between a Prequalification Letter from a Lender and a Mortgage Pre-Approval.
A Mortgage Prequalification is based on a relatively quick review of a Buyer’s work history, income (including sources of income) and income vs. debt ratio.
On the other hand, Lenders provide a Mortgage Pre-Approval after the information supplied by a Buyer has been verified. Yes, a Pre-Approval may take a little longer to obtain. However, it’s the best strategy because a Pre-Approval is the highest level of approval for a mortgage. Most importantly, it gives Home Buyers a significant competitive advantage during negotiations. A Pre-Approval will, very often, make their bid the "winning bid" when other offers are on the table.
A Buyer with a Mortgage Pre-Approval says loud and clear to a Seller “I’m serious about buying a home. Here’s my Pre-Approval to show that I have the ability to perform and get to the settlement table”.
Never underestimate the importance of a Seller's desire to “get to the settlement table”. It's the Seller’s primary concern (after net proceeds). When a Buyer has a Mortgage Pre-Approval, Sellers can take their home off the market and change the status to “Under Contract” with confidence, knowing there will be fewer delays throughout the selling process.
Top 5 advantages to getting a Mortgage Pre-Approval:
1.) Gives Home Buyers a Competitive Advantage and Negotiating Power
A Mortgage Pre-Approval shows a Seller that your Offer to Purchase is a “done deal”. Sellers are often more inclined to agree to and sign a contract backed by a Mortgage Pre-Approval, even if they have higher offers with a Pre-Qualification letter. A Buyer with a Pre-Approval often motivates Sellers to be more flexible with offer terms. Who doesn’t like getting a great price and the best terms on a home? In my experience, a Pre-Approval allows a Buyer to offer a lower price when they compete against Buyers who have not been Pre-Approved.
2.) Saves Time
A Mortgage Pre-Approval is a time saver on many levels. As a Buyer, you save time by focusing on properties within your price range. Instead of looking at “pie in the sky houses”, you look at properties you can afford. With a Pre-Approval, Lenders ask a few more questions and take a couple of extra steps to get you verified (examples include confirmation of income and credit check). As a result, a Pre-Approved Home Buyer moves the buying process along more quickly because the Lender has already approved and agreed to finance the purchase.
Yes, there will be a few more documents to gather based on the Lender’s requirements. Yes, the property will need to be appraised and you'll want to do all necessary inspections. However, with the essential Step #1: Get Mortgage Pre-Approval completed in advance, closing can be done more quickly. This saves time for everyone involved in the process of buying and selling a home.
3.) Avoids Disillusionment and Disappointment
As a Buyer with a Mortgage Pre-Approval, when you find the perfect home, no one can tell you that you do not qualify to buy it. Sorry!! You’ve already been verified with a Lender. You have the buying power to make that perfect home yours. During the home search process, this minimizes last minute surprises and disappointment. As well, it reduces anxiety and stress during the home search. Looking in the right location is crucial to a successful home search. Looking in the right price range is tantamount to success.
Once a price range is established, you can devote energy to more important things such as “will my car fit into the garage?”, “is the house in the right school district?”, “does floor plan work for our needs?, and "how far is my drive to work, relatives, and friends?"
4.) Mortgage Pre-Approvals Motivate Sellers to Take Offer
The best homes in the Northern Virginia Real Estate Market sell quickly. Home Sellers often receive more than one offer. As a result, they have the opportunity to compare offers before making a final decision on which one to accept. From my experience, after giving first consideration to a CASH Buyer, Sellers pay closer attention to offers that include a Mortgage Pre-Approval. That document tells Sellers the Buyer is already working with a Lender who is willing to finance the purchase. The deal is as good as done.
5.) Buyers Know Exactly Home Much It Costs to Buy Their Dream Home
Many Home Buyers, especially First Time Home Buyers, do not always realize there are additional costs associated with buying a home. A professional agent will review all costs associated with purchasing a home: Title Insurance, Inspection Fees, Lender Fees, Home Owners Insurance, and Escrows (taxes and homes owner’s insurance) to name a few. Along with a Mortgage Pre-Approval, a Lender can provide a document that closely estimates all costs to purchase a property. This benefits you as a Buyer because you'll have the total picture and be able to make an informed and knowledgeable decision.
Having information on closing costs, along with estimates associated with repairs, renovations, and landscaping improvements, is a huge help when making a decision on which home to buy…or not buy.
Without a Mortgage Pre-Approval, most agents won’t work with a Buyer
When you really think about it…it makes sense. Right? When you hire an agent, they are 100% loyal and dedicated to finding the perfect property with the benefits and features you desire, regardless of how long it takes. In addition to all the time you spend searching the Internet for the perfect home, Agents also spend countless hours researching the best homes available and touring homes when your schedule allows. If you were in your agent’s shoes, wouldn’t you want some assurance that your hard work and time spent would lead to a favorable outcome?
Very simply put, that’s exactly what a Mortgage Pre-Approval does. It guarantees a favorable outcome of the home search process…for everyone involved.
Getting a Mortgage Pre-Approval is easy and can be done conveniently online in a matter of minutes. Check out Rich Godbout's link to Caliber's online Loan Application: Click Here
Basic Bottom Line for NoVA Home Buyers...
In Northern Virginia, and many other competitive markets around the country, having a Mortgage Pre-Approval adds clout to your offer. In a competitive real estate market, Sellers have the luxury of weighing one offer against another. A Buyer with a Mortgage Pre-Approval instills confidence that they are ready, willing, and able to buy a home. That speaks volumes when it comes to negotiating the best price for the home you've seached tirelessly for and selected as "perfect for your needs".
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I grew up in Fairfax County and playing sports throughout the area. As an adult I have been running my own company for almost 10 years. I took a struggling franchise and grew it into the largest of i....