Why do you need a prequalification letter in hand before you go out looking at homes for sale?
When you are thinking about buying a home one of the first things you’ll need to do is obtain a prequalification letter from a lender. This is the first step in the home buying process.
One of the first questions I ask a Buyer is this: Have you been prequalified by a lender? When we go out looking at properties I want to be sure that you’ve got your prequalification letter in hand. That way, when we find a home that you love, we will be in a stronger negotiating position right out of the gate.
The worst thing you would want to happen is to find a home you love, want to write an offer on it, and find out a competing Buyer is already submitting an offer. Without a prequalification letter you are going to have to contact your lender and get that letter as soon as possible. That delay could likely cause you to lose out to the other better prepared buyer.
Another big benefit of being prequalified is to find out your purchasing power. Don’t be like a recent buyer who wanted to buy a $350,000 home only to find out they only qualified for $250,000.
So, what happens when a lender prequalifies you?
- They are going to check your credit score. Your score will determine your ability to get financing as well as the interest rate you’ll be offered.
- They will ask questions about your income. This will determine the amount of the loan as well as your home shopping price range.
- They will want to know your employment history.
Based upon your “qualifications” the lender will provide you with a prequalification letter that you can submit with your offer.
So, let’s find a home that you love, submit an offer, execute a contract, and get you closed and moved in within the next 30 days.
