Getting Pre-Approved Wasn’t My First Step In Buying A Home: Here’s Why

  • Normally, I would have applied for pre-approval with several lenders before buying houses.
  • Instead, I first met with real estate agents to find out where in the area I could afford to live.
  • My real estate agent gave me advice on choosing a lender and I ended up only applying with one company.

In my two-plus years as a mortgage reporter and editor, I’ve learned the importance of a pre-approval letter.

When a mortgage lender gives you pre-approval, they are saying that they would like to work with you under certain conditions. The letter indicates the type of mortgage you are approved for and the amount the lender will lend you. Showing a seller your pre-approval letter can give you a leg up on other potential buyers, so it’s usually crucial to have a letter before you start buying homes.

But getting pre-approved wasn’t my first step in the home buying process, even though I thought for two years that it should be. I wanted to take another step first.

I wanted to speak to a real estate agent before doing anything else

When you apply for pre-approval, the lender makes a firm credit request that affects your

credit score

. Before taking that step with one or more lenders, I wanted to meet with a realtor to find out if my husband and I were even in a good position to buy right now, based on the local market.

We met a real estate team recommended by friends who had used these real estate agents to buy and sell their homes over the years. We talked about our budget and what we wanted in a home, and the realtors were honest about what neighborhoods we could afford to look in.

They also walked us through the process of buying a home and applying for a mortgage in that first meeting, including any additional costs that we might not have already considered. At the end of the meeting, I was convinced that we were ready to begin the process of buying a house.

Then they asked us if we already had a lender in mind.

The real estate agent directed us to a good mortgage lender

Originally, my husband and I thought we would apply for pre-approval from a local credit union. We believed that a small, community-oriented business could have good customer service. We had talked about working with the credit union we went through when we bought our car, as they had given us a fantastic interest rate on the car loan.

Then the real estate agents told us that was probably not the best idea.

The seller’s market today is hectic and fast-paced, and many

credit unions

work only during traditional business hours. So if we were looking at a house after dinner and needed to discuss the details before making an offer the next day, we might not be able to reach anyone.

Realtors have told us that credit unions will often only work with members, so our agents have had issues in the past when trying to call a credit union about a mortgage, but the credit union only spoke to them if the member was present.

These are all factors we never even considered, and I’m glad we didn’t waste time getting pre-approved by a company that wouldn’t have been the right fit for us on this market.

Instead, real estate agents said they had a handful of lenders they worked with regularly and had good experiences with. We chose to work with the lender and loan officer that our real estate agent had used to purchase his own home. We left the meeting and almost immediately contacted the loan officer to discuss the pre-approval. The following weekend we toured homes for the first time, ready with our letter.

My approach ended up being the best thing for our home buying journey

In a “normal” housing market, researching lenders and getting multiple pre-approval letters would have been one of my top priorities. But in this market, I knew we had to move fast. It was not uncommon for a home to be listed on Thursday and review offers on Monday – and that was assuming the seller didn’t accept an early offer over the weekend.

Our loan officer did his job well and knew that we were working with real estate agents who dealt with him regularly. He was practically at our entire disposal, answering phone calls and texts at night and on weekends. We felt comfortable working with him because not only had our real estate agents used him when buying their own homes, but our friends who had recommended our real estate agents to us had also been through him and had a good experience.

He was also able to close the house three weeks after our offer was accepted, which was one of the fastest turnaround times I’ve heard of. We knew this could be appealing to sellers who wanted to leave the house quickly.

In hindsight, I may have done one thing differently, though. I would have asked our real estate agents for the names of all the lenders they liked to work with and would have requested pre-approval from each of them so that I could compare interest rates and terms.

Still, I have no regrets. Buying a home in today’s market was exhausting and stressful, and having a loan officer I could rely on was just one less thing to worry about.

About Joan Ferguson

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