Have you been pre-approved?

It used to be that the steps for purchasing a home were as follows:

1. Look around to see what kind of homes and neighborhoods you like.
2. Find a real-estate agent.
3. Make an offer on the house you like.
4. Negotiate.
5. Enter into a contract to purchase.
6. Apply for financing.
7. Get financing.
8. Close on your new house.

We all know that times have changed, and the main change is that getting financing is no longer a "given". Many, many people are just not going to qualify for any form of financing, and most people are going to find that they are simply just not going to qualify for as much of a loan as they would like to.

Step ONE in shopping for a house to purchase is getting yourself pre-approved by a direct lender. This means having your credit run and submitting proof of income and expenses to the lender. This means having a piece of paper that you can hold in your hands that states how much you can borrow, the type of loan, your credit score and that this offer to finance is from a direct lender. Nothing less is going to be good enough.

What is the point of looking at homes you can't afford and getting your heart set on one? If you look within your price range exclusively, you are bound to find a little gem that you will fall in love with. A home that is too expensive for you will have fixtures and finishes that are to die for. There is nothing wrong with appreciating a nice home, a fancy car, a designer purse or pedigreed dog, but you are only setting yourself up for frustration and disappointment if you set an unattainable standard for yourself.

But this is not just a lecture on emotions. Getting pre-approved is a requirement at this time because home sellers are requiring that you submit proof that you are able to pay for what they are selling. Sellers are refusing to accept an offer to purchase unless proof of funding is part of the offer! The time-period from contract to closing is a long time to waste if the buyer cannot obtain financing. The longer a home is on the market, the more the price should be reduced! Even worse for the seller, while the house was under contract, they may have been missed by a buyer who really could purchase the home but bought another instead.

Get thee pre-approved!!!! It's nothing personal. We are asking it of everyone, we did not look at you and say "this guy looks sketchy, let's see if he can put his money where his mouth is." It's just a good business practice that has become a requirement. It's information we're going to have to get out of you at some point, why would you have a problem putting your cards on the table now instead of later?

Happy house-hunting. There's lots of bargains out there!