So many times when I start working with first-time homebuyers, emotions are high and expectations are perhaps a little unrealistic in terms of what to expect throughout the real estate process. Have no fear, though, that’s why you’ve got a professional working on your behalf.
Early in my real estate career it was not uncommon for me to drive out to meet a potential new client at a home they were interested in. I’d show them a home with gorgeous new granite counter tops and a luxurious master suite and they’d be thrilled and ask where the dotted line was for them to sign and submit an offer.
If only it was that easy.
The Reality About Buying A Home
What potential buyers may not think about as they’re starting up their house hunt, is that almost all first-time homebuyers fall under the category of people who will need to obtain financing from a lender in order to purchase a home. And until your lender gives you a soft “thumbs up” or pre-approval letter that essentially says that your financial situation is intact and that you have the capacity to qualify for a loan, there’s not a whole lot of point in running all over town to look at homes that you cannot afford (or looking at homes that are a lot cheaper than you can actually buy).
Everybody’s financial situation is different, but by taking into account items such as savings, credit score and debt-to-income ratios, lenders can really help give you a good framework for which to work within when taking a look at homes. Based on what your unique situation looks like, you’ll be able to see what monthly payments calculate out to and decide what you’re comfortable with.
From there, you then have the ability to walk into every single home that you see with your real estate agent knowing that you have the capacity to buy it if you want! How cool is that?
Getting Leverage With Your Pre-Approval
Besides the fact that obtaining preapproval on the front end of the real estate process is a time-saver, it’s also a big point of leverage when submitting an offer on a home. If John Doe shows up and writes an offer on the same house as you and doesn’t have pre-qualification from his lender, and you show up and write an offer on the same exact house but already have that letter in hand from a lender, that pre-approval may in fact be the item that tips the scales in your favor for you to get your offer accepted.
In really hot housing markets like here in Nashville, Tennessee, it’s not totally uncommon for listing agents and their sellers to not even consider offers that don’t already have a pre-approval letter attached. “Not even consider an offer,” you say?
Sounds crazy, right? Not really.
Obtaining pre-approval before submitting an offer on a home shows the sellers just how serious you really are. Besides that, it gives you confidence knowing that the homes you then look at could all potentially be “the one” and it potentially saves you hours of house hunting and tears, too.
Although it may seem like a minor item in the grand scheme of the home buying process, speaking with a lender and getting pre-qualified for a mortgage on the front end really and truly is the best route. It saves time and paints a much more accurate portrait of what you’re really looking at.
It also enables your real estate professional to zero in on the best property for you, and at the end of the day getting you the home that fits your wants and needs is what it’s all about.
Are you thinking about pulling the trigger and buying your first home but want to learn more about the real estate process or how to get in touch with a lender? Give me a shout at [email protected] or reach out to the guys here at BuyYourFirst to get the process rolling!