When should you get pre-approved for a home loan?
Let's talk about when you should be pre-approved or pre-qualified to see homes.
You should be pre-approved or pre-qualified as soon as you can in the home buying process, and here's why: In the process of looking for a home that you want to buy, you may just want to buy it so much that you're willing to move forward on it.
Market conditions are different from month to month, from location to location, but what is the same is that it is difficult to predict how soon you're going to see THE home that you want to pursue. If you do see THAT home, you want to be in the right position to pull the trigger on it, but even before that, you want to be in a position where you CAN go see it.
Many agents - in fact, the ones you WANT to work with - will only show homes to people who have been pre-approved or pre-qualified. You want to work with the best in the industry, not necessarily the busiest, but rather the most skilled in the industry. Furthermore, you want to work with the type of people who will insist that you are able to buy a house before they start introducing you to homes that you might want to buy.
So this is a prudent thing for the agent to help you with; it is a prudent line for them to draw. So reward that level of care by seeking out those types of agents to work with.
So . . . if you've got to be pre-approved to buy the home, and you should be pre-approved to start looking lest you fall in love with something that you aren't able to pull the trigger . .
then you should be pre-approved earlier. I would recommend that you start your home buying process with that consultation with a lender or a loan officer at a bank in order to be pre-approved. Let them tell you how much you're qualified to buy and then start looking based on that qualification.
If a lender says that you're qualified to buy a. $350,000 home, but that will be this $X down and $Y per month and you hear those two numbers and you say, "whoa, whoa, whoa! That would be doubling my monthly costs and that would be everything I have in the bank" then yes from a financial-qualification standpoint, you can buy the house, BUT . . .
you know, your own budget and your own life well enough to know what that's going to mean for you. So start the process with that pre-qualification consultation with the bank and then take what they give you and it hold it up to what you know about your life. How has that down payment and that monthly obligation going to impact you?
Is it going to be a blessing or a constraint?
And then once you know that and you dialed in the number, then start looking because there's a funny thing that happens in the home buying process. A $500,000 home is typically more valuable than a $400,000 home.
Why? Well, because it's more valuable. Why is it more valuable? Well, location, location, location that certainly helps. And then there are other conditions like does it have more land or less land? There are all different factors that make homes more valuable, but largely if you look at a $500,000 home while you are trying to buy a $400,000 home, you're setting yourself up for some unnecessary hurt and sadness. So don't do that. Let's put everything in the right order.
Start your buying process by talking to your bank or your preferred lender. If you don't have a preferred lender, please let me know. And I'll introduce you to the ones that I find to be the best and the most ethical, trustworthy people in the industry.
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