This time of year, many of us can be found window shopping – strolling through shops online, at the mall or downtown. Window shopping is fun, it’s entertaining, and it can be a great way to narrow down your Christmas list. When you first begin thinking about purchasing a home, this is a fine way to dream about your next home. Once you are ready to begin your home search in real life, however, it is time to move beyond mere window shopping and to seek approval from a lender. Being pre-approved for a mortgage before you being your home search is vital, and here’s why:
- In a Seller’s market, you must behave like a serious buyer in order to be taken seriously. It’s not difficult to set up a showing, but going to the effort of gaining approval from a qualified lender before you begin the home search process proves you are in it to win it – not just a looky-loo. You definitely don’t want to be the only offer without an approval letter in a multiple offer situation; an offer without an approval letter attached feels like a shot in the dark to the Seller – and minimizes your chance of clinching the deal.
- Some Sellers require a pre-approval letter before accepting an offer. In a slower market, you may stand a better chance of proceeding with an offer without approved financing; in a busy marketplace, however, some Sellers will not even consider an offer without financing approval attached. If you able to secure financing, or it takes a significant amount of time for you to do so, the Seller is taking on a lot of risk on your behalf. In a Seller’s market, this is likely a level of risk they don’t have to accept in order to sell their home – so why should they?
- Negotiating power is on the side of the pre-approved Buyer. Experienced agents know, if there is a Financing Contingency attached to the Contract to Buy and Sell, there is more risk on the part of the Seller and the Buyer loses much of their power to negotiate price or consolations such as Closing Cost credits or extra inclusions like patio furniture or the deep freeze in the garage.
- Time is our most valuable and limited currency – and home shopping without approval might be a waste of your time and mine. It is tempting to use free online calculators to guesstimate a payment you think you can afford and launch right into your home search on a whim and a prayer. The best way to know how much home you qualify for, though, is to work with a lending professional to obtain a concrete answer to this question. You’ll avoid frustration and disappointment when you shop for a home in your price range.
- You can conduct your home search in earnest – and with peace of mind – knowing your financing is in place. Many factors will play into your next home purchase, and knowing how much home you can afford before you shop will help you focus on the location, amenities and property features of the homes you visit without worrying whether you can qualify for the mortgage you’ll need to buy in a particular neighborhood or style of home.
I am a Denver native with over 21 years in the Real Estate business and I’d be happy to put my experience to work for you whether you are buying your first home, investing in your next hot property, selling your current home or relocating to or from the great state of Colorado.
The Meyers Group