As a first time home buyer you are inevitably excited to run out the door and start looking at possible future homes. However, you unfortunatley are skipping a critical step: pre-approval. Many buyers don't understand the reasoning why it is so important to be pre-approved by a qualified lender before ever walking out the door to start looking at new homes. Here are a few reasons:- You need to know what you can afford. You may have a good idea of how much you can afford, but how do you know that the bank will actually lend you that much money? Many people assume they will be able to get a loan because the have been pre-approved in the past, but times have changed.
- Get your financial picture in focus as soon as possible. Since it is an important component, be aware of your credit situation.
You may be unaware of certain negative items that may be on your credit report and can impact you ability to obtain a loan.
- Talking to a lender will give you an idea of different loan options that are available to you. Conventional, FHA, Fixed, Adjustable, 203(K) rehab loan... With the recent economic downturn there are a large amount of REO and short sales homes on the market that can be a great investment for a first time home buyer. A lender can explain these financing options and will also give you a good idea about how much money you will need for a down payment and how much for closing costs.
- The seller will NOT take your offer seriously unless it is accompanied by a pre-approval letter. Many sellers will not even accept an offer without a pre-approval. The seller wants proof that you are able to afford their home. They do not want to waste their time and money waiting for a deal to close if it is likely that the buyer will not get financing. You do not want to fall in love with a home and waste valuable time waiting to put an offer in on it because you did not do the upfront work first of getting pre-approved.
- Many licensed agents will not take you out to look at homes until you have a preapproval letter. Agents do not want to waste their time or your time by running around town with a client who might not even be able to financially secure a loan and close a deal.
Today, many lenders have quick and easy website links that allow a client to complete preapproval process without ever leaving the home you can begin your new home search without delay.
Indianapolis Real Estate
