Why Do You Need A Home Loan Pre-Approval Early?

Consulting with a home loan lender is one of the first steps in searching for a home to buy.  In fact, it should be the first step.  Don’t consider this a mere suggestion.  Consider it a requirement.  Really. It is very important to have a loan pre-approval before spending much time looking at homes and definitely before trying to buy a home.  Here’s why you need a home loan pre-approval early…

1.  A copy of a buyer’s loan pre-approval letter accompanies the offer a buyer submits to a seller.  The pre-approval letter informs the seller that a lender has determined that the buyer has good potential for obtaining a loan.  Without this information, a seller is not likely to accept the offer.  Sellers’ agents can be expected to advise sellers against accepting an offer without any accompanying verification of financing potential vis a vis a home loan pre-approval letter.  Also, many buyers’ agents understandably will not spend much time, if any, helping buyers without knowing that their clients can get a loan.

2.  Details of a buyer’s prospective loan are described in the offer the buyer submits to sellers.  This information is only available after receiving it from a lender in the form of a pre-approval letter.

3.  Buyers know their borrowing potential.  This guides home searching efforts and the choices on homes to see and to consider for an offer.

4.  Offers to buy homes note two important dates that are based on insight received from a lender.  (These are contractual requirements.)  One date is the deadline for a buyer to inform the seller of their conditional loan approval received from their lender.  The other date is the settlement date.  The settlement date is when the sale/purchase transaction occurs and it can only occur after the lender provides final loan approval.  These dates are reliant upon the lender providing conditional loan approval then final loan approval.  Consultation with a lender needs to occur before submitting an offer in order to have this scheduling information for the offer documents.