Why You Should Get A Preapproval Letter Before Shopping For A Home
If you are buying a house for the first time in your life, chances are you might be confused about the steps involved in the process. Most first-time homebuyers are confused, simply because this is all new to them, so you are not alone. One tip real estate agents offer to first-time homebuyers is to get a preapproval letter from a lender before you start shopping, and here are the reasons this is the most important first step to make.
It Shows That You Qualify For A Loan
While there are real estate agents around that might not ask to see your preapproval letter, most will. Real estate agents earn commissions when they help people buy and sell homes, so they want to make sure that their clients are qualified to buy a house before they begin spending their time helping people look at homes for sale.
A preapproval letter from a lender will show that you qualify for a loan, and this is in terms of income, credit, and money to put as a down payment. To get a preapproval letter, you will have to go through the process of applying for a loan. You should realize that a preapproval letter does not guarantee with 100% certainty that you will get a loan, but it does show that, as of right now, you meet the requirements needed to get a home loan from this particular lender.
It Guides Your Budget
The second main reason you should get preapproved before shopping is to have a guide relating to your budget. A preapproval from a lender not only states that you are qualified to get a loan to buy a house, but it also shows the maximum amount of money you are qualified to borrow.
You can use this amount as a guide while searching for homes. If the lender states you are qualified to borrow up to $250,000, you might want to stick with searching for homes that are this amount or under. You might also want to look at homes that are slightly higher than this, simply because there is typically room to negotiate when it comes to the price you pay for a house.
These are the two main reasons getting a preapproval letter from a lender is important before you start shopping for a house to buy. Once you have this, contact a real estate agency to find an agent you would like to work with.