Get Preapproved Before You Find A Home To Buy

by Ron Haynes

Once you’ve chosen a lender and a size and type of loan, the next step is to get prequalified or preapproved for your mortgage. Yes, all that comes BEFORE you find a home you’d like to buy. If you find the home first, you may not be able to afford it so make certain you know what you can and cannot afford before you let your emotions take over and get you into a loan that’s over your head financially.

What’s the difference between pre-qualified and pre-approved?

  • Getting prequalified: To get prequalified, you provide your chosen lender with information about your income, assets, and debt. The mortgage lender then generates an estimate of what size mortgage you likely can get. Once you have an estimate, you’re prequalified for a loan. This isn’t what you need and it’s a a much less formal version of preapproval.
  • Getting preapproved: To pre-approve you for a mortgage, your lender conducts a thorough analysis of your financials. You’ll probably need to provide pay stubs, tax returns, and copies of account statements. Some lenders charge a fee of about $50 in order to pre-approve you for a mortgage.

One vital aspect to getting either pre-qualified or pre-approved is knowing your credit scores, all three of them. Check out GoFreeCredit.com to get all three of your scores for free. That way, should you uncover anything unusual, you’ll be able to get it corrected before going through the hassle of providing financial information only to find you don’t qualify because of an errant credit score.

Prequalification and preapproval indicate that you’re likely to qualify for a mortgage of a particular type and size, but neither guarantees that you’ll be approved when you actually apply for a loan. Even so, it’s always helpful to get preapproved, not just prequalified, for a mortgage. Why? It all boils down to time. The sooner you can let a lender know you’re ready to get serious about a particular home and the sooner your mortgage lender has your financial information, the sooner you’ll be able to know if you can actually buy that home.

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Then find a home that you’d like to buy

Once you’ve been preapproved, you’re ready to begin shopping for a home. As you shop, remember that you’ve been preapproved for a mortgage of a certain size. That doesn’t mean you absolutely must find a home below that price, but choosing a significantly more expensive home will require you to start all over with your lender.

After you find a home, you’ll:

  1. Make an initial offer to the seller: Your offer should be 10–15% below the total of the loan amount for which you’ve been preapproved plus the down payment that you expect to pay. That way you’ll still have wiggle room if the seller demands a higher price.
  2. Negotiate a final deal with the seller: Once the seller receives your initial offer, he or she will likely make a somewhat higher counteroffer. You’ll then negotiate other terms of the deal, such as whether the seller will pay for repairs or upgrades to the property.
  3. Sign a purchase agreement: A purchase agreement is a contract that formalizes the terms of the deal to which you and the seller have agreed. Usually the buyer’s real estate agent drafts the agreement.

Once you have a purchase agreement signed, the real estate agents and lenders will set a closing date. On the closing date, the sale of the property will close or finalize, and your lender will transfer funds to your seller and the keys to you!

About the author

Ron Haynes has written 989 articles on The Wisdom Journal.


The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a Human Resources and Management consultant, helping companies know how employees will behave in varying situations and what motivates them to action, assisting firms in identifying top talent, and coaching managers and employees on how to better communicate and make the workplace MUCH more enjoyable. If you'd like help in these areas, contact Ron using the contact form at the top of this page or at 870-761-7881.



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