When my husband and I were starting our home search, nothing took the wind out of my sails faster than walking into an open house… with 50 other people. We would sheepishly stand at the curb and pretend like we were in the Realtor.com commercials featuring the “not-yous” who would sneak in and steal the house of your dreams. Even if the house wasn’t a good fit, a layer of defensiveness mixed with shyness (you KNOW that’s not me) washed over me and I lost my will to carry on (dramatic… I know).
Now, I can’t tell you why this happened, because we were ready to go. We were serious, we were educated and we were, most importantly, PRE-APPROVED for a mortgage by a lender. Oh Libby, you just took something exciting and made it sound terrifying and boring. (Bear with me!)
If you’re in the home buying process right now, you may have heard the words pre-qualified or pre-approved floating around. In today’s market (at least in the Triangle), this went from icing on the cake to an absolute must have for serious buyers. In many situations, a seller might not even consider an offer without at least a pre-qualification letter, and if there are buyers side by side in a bidding war who are pre-qualified vs. pre-approved, the pre-approved buyers will likely win 111000/10 times.
Stopppp. Don’t Care. Simplify.
Being either pre-qualified OR pre-approved by a mortgage lender shows sellers that you have the ability and the interest to buy what they are selling. Full stop.
Being pre-qualified means that you Googled a lender’s phone number or email (or found a form online), you have spoken to them about your income and they have *likely* pulled your credit score. Read that again: this step is 50% based on what you SAY to a lender. You could call someone up, totally fudge your income and leave with the same pre-qualification letter as someone who was up front and honest. Furthermore, you could purchase a home with a credit score of at least 660, so that won’t really stop you. Please know this is better than nothing, but can you see why a seller prefers someone who’s taken the next step?
Pre-approval is one better in the lending process. It can also be done over the phone and through secure online systems. There is still no commitment to a lender or to a home, but the difference is that you’ll submit some documentation and other paperwork to prove what you’re saying is accurate.
Even if you are just starting, this process shows you how much you can realistically afford. If you are even slightly curious about the market, it’s important to arm yourself with this knowledge and preparation. There’s absolutely no reason to waste your time and your precious emotions falling in love with something you can’t have. We have This Is Us for that.
I know that is a big dose of reality that just rained all over your Open House tour this Sunday. I’ll let it sink in, and be back. next week with another tool for you to arm yourself with to send the “not yous” packing.
PS. If you are ready to learn more or just get a high level view of what the mortgage process could look like, my company offers an in house mortgage banker, Trevor. He’s approachable, informative and FAST at getting you any info you need!