The Hands-Down #1 Mistake homebuyers make when they start home shopping, and why knowing this is helpful in many ways.
Do you already have an idea what the #1 homebuyer mistake is?
Financial Planners, financial industry experts and top real estate agents agree that NOT getting PREAPPROVED for your mortgage BEFORE contacting a real estate agent is the #1 most common mistake made by many homebuyers. Here is why that is a time wasting mistake, and why wasting time at the start of your home search could cost you your dream home.
We all pretty much agree that the exciting part of buying a home is touring properties with the real estate agent enabling us to gather ideas and see what is available that meets our goals and dreams, and we can hardly wait to get started. Naturally, we assume the real estate agent is the primary guide for that experience because they can provide access to the homes.
And mortgage lenders on the other hand, who are the most vital component of that entire experience, are not associated with that same home shopping excitement feeling and instead are rightfully associated with paperwork, credit checks, and sometimes financial complexity. Those things are less appealing as a starting point.
However, just as the financial experts and top agents agree, and this is important to remember, getting your mortgage preapproval first before anything else is the necessary first step that hands-down all real estate agents require of prospective homebuyers. The agent will ask the homebuyer to show the agent their mortgage preapproval before they will show any homes to them. Why is that the first question the agent asks the homebuyer?
The reason the agent will not show homes unless a prospective buyer is preapproved first is that the agent needs to understand how much the buyer is preapproved for. Showing homes that are listed for more than a buyer is preapproved for is a complete waste of time for both the buyer and the agent and even the seller.
In addition, without being preapproved first, you won’t be able to make a qualified offer to the seller. Your real estate agent won’t submit an unqualified offer and the seller certainly wouldn’t even entertain an unqualified offer from a buyer who’s not preapproved first – unless of course it’s a strictly cash offer. Imagine looking at a $600,000 home and falling in love with it only to find out later that your finances qualify you to purchase up to a $500,000 home so there is no way you can buy that $600,000 home.
How disappointing that would be! An emotionally disappointing, draining and perhaps even an embarrassing let down plus a waste of everyone’s time. Even pre-shopping online can potentially lead to disappointment especially when you think you know how much home you can safely afford to purchase and then find out it’s a different number after getting preapproved.
Another scenario might be that you’ve been waiting to select a real estate agent while you shop online first. Then, after much searching you finally find the perfect home and quickly choose a real estate agent to show you the home. The agent asks if you’re preapproved for a loan but you’re not. So you go to a mortgage lender who approves you later that same day. However, by then, the home has been shown several times and goes under contract from someone who was prepared by being preapproved for a loan first.
Save yourself time and potential great disappointment. Commit to doing it right from the very start and get preapproved for a mortgage first and then take your preapproval letter with you to the real estate agent when you begin home shopping. Then, let the exciting part begin!
I hope you see the value in this and it has been helpful to you.