The Most Important Step To Buying A Home

Real Estate Agent with Howard Hanna Real Estate Services



If you were taking a home buying class, this would be the first thing you talk about. Basically real estate 101, getting pre-approved.

It may seem simple, yet many potential buyers are making a huge mistake by either neglecting this step or only getting pre-qualified, which is much more watered down version.

Failure to get a firm pre-approval may end up costing you the home of your dreams.



When the real estate market was slow, the sense of urgency to get financing was not very high. Buyers figured they could take their time to find a home, and then they'd firm things up with their lender afterwards.  However, with the market starting to really heat up and inventories still low, buyers must change this lackadaisical mindset.

The problem isn't that buyers are totally forgetting to speak to a lender, although some still do not do this up front. They are simply getting pre-qualified instead of pre-approved, and there is a big difference.

A pre-qualification is just the initial step, typically a phone conversation about your overall financial picture. The lender may discuss income, debts, and go over different payment options, but it should not be confused with a firm pre-approval. The problem is that many buyers only do this initial step, and have the false sense of security that getting a loan will not be a problem. Some find out the hard way.

In order to grant a full pre-approval letter,  a lender will likely complete a formal application, pull credit, and collect specific documentation from you such as pay stubs, W-2's, or tax returns. This will allow them to better define your maximum price range. It may not seem like a big deal but this extra step makes all the difference in the world.

I have seen cases when a buyer gets pre-qualified over the phone, and then ends up not qualifying once the lender verifies all pertinent information. Don't let this happen to you.



Getting pre-approved will make you a stronger buyer and allow you to move quickly if needed. In an active market, you never know when that special home will come on the market, and when it does, you will need to act with a huge sense of urgency. Waiting until after you find your home to get your financing in order may be too late.

With multiple offer situations becoming common, having a solid pre-approval letter may even help you win out during a bidding war.

The difference between getting pre-approved and pre-qualified is merely time and a little effort on your part but is well worth it. In fact, it could ultimately determine whether or not you get the home.


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Here are some of our others posts that may interest you as well:

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Real Estate Agents Are Not Just Door Openers



About The Authors:

Dan and Amy Schuman are agents with Howard Hanna, the area's largest real estate company. They live in Solon Ohio and specialize in Cleveland Luxury Homes, working with buyers relocating to Cleveland, and first-time buyers.




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The Most Important Step To Buying  Home is the property of The Schuman Team and may not be duplicated or used without their written consent. ©February 2013


Re-Bloggged 4 times:

Re-Blogged By Re-Blogged At
  1. Mike Mitchell 02/11/2013 07:45 AM
  2. Graziella Bruner 02/11/2013 12:57 PM
  3. Sharon Sapp 02/12/2013 07:22 AM
  4. Doug Patterson 05/18/2013 07:43 AM
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Comments 41 New Comment

Jim Basquette
CRS, CNE, SFR, e-Pro
Huff Realty

I find too many lenders do a pre-qualification and put it on a letter that says pre-approval.  They are not willing to do the work. 

February 12, 2013 07:28 PM
Nancy Middleton
Nancy Middleton, Counselor Realty, Minnetonka, MN
Counselor Realty, Inc.

Dan and Amy: I agree with the many who responded that they won't even show homes to people who aren't willing to meet in person with a lender. I encourage them to use my lender whom I've used for 34 years and trust. It is in their best interest to use an experienced lender, not just their friend who has become a lender  recently. If they aren't willing, it shows me that they aren't, serious motivated people who really want and are prepared to buy a home, not just look at homes. It has to be a full pre-approval letter that will go with the PA for an offer, and not just a Prequalified letter that "they look good." This is really the first step to buy a home as you said, Dan and Amy.

February 12, 2013 09:22 PM
Kimo Jarrett
Kimo's Lifestyle Solutions
WikiWiki Realty

There is a a comprehension issue with buyers who believe that a pre-qualification is a preapproval to secure a mortgage loan. Additionally, many real estate agents are advising their clients about mortgage terms, conditions and rates and are in fact breaking the law because they aren't properly licensed as NMLO's.

I encourage all RE agents to secure their NMLO license so your clients can be pre-approved with your assistance.

February 12, 2013 10:58 PM
Sharon Parisi
Dallas Homes
Keller Williams Dallas Premier Realty

Dan and Amy, your well done post is a good resource for all buyers!

February 12, 2013 11:20 PM
Tom Esposito
Alpharetta Home Solutions

Great advice.  I'll work one appointment with a buyer before I require they be Pre-approved.  Most buyers today, get it!  They know the beginning steps.  They don't waste your time or theirs looking at homes they don't qualify for.  Of course, it's a great time saver and benefit to have a lender who likes working with you and getting and giving referrals, too.  I have one of those and treat her like "gold".  One of the first members of my "team".

February 14, 2013 12:32 PM

Dan and Amy Schuman

Luxury Home Specialists
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