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Call up a local realtor about a property that you’re interested in seeing and the agent might ask you if you have a pre-approval letter before agreeing to show you the property.  Why is that so important?  Can’t they just show me the property if I’m an interested buyer?

Getting a pre-approval from a lender will show you exactly what price tag you can afford.  They factor in many things, such as credit score, current income and debts.  They can show you the breakdown of the estimated fees associated with a new home loan (and estimated taxes and insurance) so you can factor that into the price you will end up paying on top of the contract price.  This will help you narrow down the price range you or your agent need to be looking in.

Agents prefer to work with a potential client that has a pre-approval in hand because it shows they are a serious buyer.  It also helps them in their search for you, knowing what amount of home you are preapproved to purchase.  This saves lots of time!  An agent invests their time in scheduling showings, reading disclosures about the property so they can give you more information and then actually showing you the home.  It uses everyone’s time more wisely when you show how serious you are about buying a home by having that preapproval letter up front.

Sellers are also less likely to want to accept an offer from someone that hasn’t been approved for a loan.  If there are multiple offers on the property, they’re going to skip right over yours!

All in all, you will spend your time much more wisely when doing a home search when you know exactly the price range you need to be shopping in.  It will eliminate the disappointment for both you, your agent and a potential seller.  And it will help you purchase the right home at the right price so you can ENJOY the home search and then ENJOY moving into your new home!