I would say that despite the abundance of information on this subject, realtors telling people to get preapproved first, and every loan officer I know doing the same thing, this still seems to be a question that comes up regularly. So here is a basic list of why:
- You don’t want to waste your own time. There is nothing worse than desiring something that you can’t have, or can’t afford. The far better way is to make sure that you can first. That is in essence what preapproval does.
- You don’t want to waste the realtors time or all of the many others involved in scheduling and finding the right home such as the homeowners and their realtors.
- You don’t want to be looking for $500,000 houses if you can only afford $250,000. It doesn’t do anyone any good.
- Sometimes there are very specific loan requirements, such as no defects in the home, or not inside the city limits, or not in a certain area to qualify for a particular home. USDA rocks!
- Sometimes there are some small things that you need to do first. This might be credit wise, such as payoff some bills, make payments on time, etc. Or it might be save more, get some assets showing in the bank, etc. All of these you need to know BEFORE making an offer on a home.
- Maybe there are some more options that you haven’t considered. These could be a couple putting the loan in just one person’s name, getting a cosigner, or simply the timing of when to make an offer. All of this is best to find out ahead of time rather than afterwards.