Why is it important to prepare before buying a new home? Can’t my real estate agent simply make an offer on a home that I think is perfect for me and my family? The short answer is, yes. The not so short answer in this unique housing market should be, no, unless… Unless, what? Unless you are pre-approved with a lender. A buyer must prepare by doing his or her homework. Especially in this highly volatile housing market, preparation is the most important step in the home buying process.
Many prospective buyers are using the internet now more than ever, making it quite easy to view a home online, fall in love with it, and decide to make an offer as soon as possible. As in, today! The ideal order of the buying process should start with finding a trusted real estate professional, then visiting with a local lender. Whether you communicate with a loan officer at a local bank or a local mortgage broker, it is crucial to become pre-approved through a lender unless you plan to pay cash.
Mortgage pre-approval and mortgage pre-qualification are often used interchangeably; however, mortgage pre-qualification doesn’t always require your financial history documentation. Mortgage pre-approval is similar but requires the added layer of documentation and verification of income, assets, and debts, along with a credit check. When making an offer on a home in this fast-paced housing market, being ready “to make an offer on the spot” as soon as you find the desired property is critical. Multiple pre-approved, prospective buyers could have their eyes on the same property! So, as you can see, time is of the essence. The seller can look at the strength of a potential buyer’s ability to purchase by reviewing the pre-approval letter already submitted with the offer. In the case of a cash purchase, a proof of funds letter would work the same way in establishing a buyer’s ability to pay for the property.
In preparing to buy a home or other property, first and foremost, do your homework. Along with surrounding yourself with professionals, don’t forget to research as much as you can about a prospective home or property, and the surrounding area. You will be set apart from the rest who failed to do their homework. The age-old excuse, “the dog ate my homework”, just won’t apply in this situation.
By relying on a trusted real estate professional and reputable mortgage lender, a buyer should feel assured that he or she is placed in the best possible position to purchase when the time is right.