One of the first things I ask a buyer is whether or not they have been pre-approved. Most often, I hear that someone hasn't been pre-approved because:
-they think it's too much of a hassle
-they know what they can afford
-they were pre-approved last year so they should be fine.
Fun fact, getting pre-approved is actually fairly easy and takes very little time as long as you have your documents easily accessible. Generally speaking, a loan officer will want copies of your last two years in taxes (including any w-2s or 1099s), along with current pay stubs, at least 60 days of bank statements, and your credit score. With this information, they are able to determine what you can feasibly afford and they are able to talk more in depth with you about interest rates and what a monthly payment could look like for you. While it might take you some time to gather the paperwork, it will save you time in the end of looking at options that might not be realistic.
When you break down what you're estimating what you can afford on your own, you may be missing some important figures- does the property require flood insurance? What are the tax rates for the home? What's the current interest rate and loan program you're qualified for? Does your loan program have restrictions on your salary or what you need to put down? Have you considered all closing costs? I always remind my clients that there's nothing worse than shopping for a Mercedes only to determine that you're on a Honda budget- while both are solid cars, they are in very different price points. There's nothing worse than falling in love with a home that is way out of budget. On the flip side, I've also had clients come back more than enthusiastic because they are able to increase their price point after talking with their lender.
Some of my clients have been with me since the beginning- literally. I have a couple of buyers that have been with me for close to three years- actively searching the market, but not finding "The One." When we initially started working together, they were pre-approved for significantly more than they are today. The market has changed over time, and as the years go on, what they want to be paying to their mortgage remains the same, but rates are increasing- making their end budget decrease.
Getting pre-approved also helps you when it comes to making an offer. I cannot remember the last time I wrote up an offer for a buyer and was the only offer being considered. In today's market, you need to come in strong, with a complete offer and proof that you're a ready, willing and able buyer to get to the next step. If you see a house on Saturday, you want to have that pre-approval in hand to write up the offer once you're ready; not have to wait until Wednesday or Thursday to have everything together. By then, the house might be unavailable!
Haven't been preapproved? Let's talk- I've got some great names and numbers that I'd be happy to share!