How important do you think it is to get Preapproved for a Mortgage?

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October 14 2011 - US
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Essential - in addition to establishing ability to buy, it frames the search. 
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October 14 2011
Not only is it wise for Buyers to get a pre-approval so that they know what they can afford, but the historically low mortgage rates today might also make the buying experience a bit less stressful. In addition, talking to a knowledgable mortgage broker might also educate the Buyer about relatively new mortgage products, such as a 203K, so that a Buyer might be willing to consider a diamond-in-the-rough.
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October 14 2011
REAs make a big deal out of this. For a person to be approved requires the loan file to be underwritten. Without that, no one can guarantee the borrower will be approved for the loan. All that this letter provides is a degree of comfort.

A fully underwritten approval with property to be determined gives the assurance that the borrower will be completely approved after the underwriter receives the borrower's purchase agreement and an appraisal on the subject property. This requires a bank, credit union or a mortgage banker with "in-house" underwriters.

Happy funding, Rudi
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October 14 2011
It's like Karl Malden used to say about the American Express Card: "Don't leave home without it."
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October 14 2011
For my buyers own benefit, I stress the importance of a pre-approval letter. I do not like to show houses without it. The last thing I want to happen is for a buyer to fall in love with a house , spend money on inspections, and appraisals, and then be completely crushed and disappointed when they do not qualify. 

Also I do explain that thispre-approval  letter gives the buyer a stronger negotiating stance, and reassures the sel ler that the buyer is serious.
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October 14 2011
I agree DSM.  I work a lot with first time home buyers and they simply do not know how things work or what to expect.  I try to set expectations, explain the process beginning with how important getting pre-approved is.  Really it is for them as much as anyone else, so they can see what a $ X mortgage looks like per month, their credit scores, and what they can do to increase them.  For most lenders, this is a free conversation to have, getting the client pre-approved because they want to earn their business.  I have seen some lenders charging for this, and I would stay away from that if I was looking to get pre-approved.
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October 14 2011
You are all correct, it is just the question of getting our buyers to understand this important step in home buying!
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October 14 2011
In today's market it is the first thing I tell potential buyer's to do.  I know plenty of agents will not spend any time working with a client until they see the pre-approval letter.  I don't take it to that level, but it is the first question I ask and I stress how important it is.  Here in Tucson, AZ the pre-qual letter (replacing the LSR) must accompany any offers on REO & Short Sales.
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October 14 2011
I cannot imagine why an agent would show a home to a consumer who was not preapproved.  As a homeowner, I would not want my dwelling showed to someone who is not qualified for the purchase.  As a lender, I want my clients to know their purchase power before they look at properties to keep their expectations realistic.
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October 14 2011
In Arizona, you haveto have either a preapproval letter from a lender or proof of funds to make an offer to purchase a home.  So toanswer yourquestion, it is essential.  It is also a good guide to how much you can afford on a home as well as how much your mortgage will cost you monthly. 
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October 14 2011
I completely agree, it is getting buyers to understand the importance!!
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October 14 2011
As an agent with a real estate AND mortgage background, it is VERY important to secure a pre-approval prior to looking for a new home as it will help you determine your purchasing power.  If you find the home of your dreams, you don't want to be disappointed when you apply for you mortgage only to find you don't qualify.
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October 14 2011
That is - before or after your clients find a house? I have been finding that people do not think it is important to get preapproved before they start looking. How do you know what you can afford if you do not get preapproved before you start looking?? Thoughts?
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October 14 2011
 
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