Why Get Pre-Approved

Why should you get pre-approved prior to shopping for your “Dream Home”?


INTEREST RATE: You need to know what your interest rate will be to know what the payment will be on your new home. The interest rate is driven by your credit score on conventional loan programs. Government programs (FHA and VA) are not driven by credit score, but your credit can have an effect on qualifying for a loan.

PAYMENT AMOUNT: There are usually three dollar amounts involved in getting a new home.

  • The dollar amount that you “qualify” for

  • the dollar amount you “feel is a comfortable payment for you”. 

  • The Maximum dollar amount you are willing to spend

When you know your interest rate, and your new payment amount that you are comfortable with, then you will know the maximum dollar amount you would like to spend on your new home.

MAXIMUM PRICE YOU WANT TO PAY FOR YOUR NEW HOME: If you do not talk with a lender in advance and get a pre-approval with the dollar amount you are comfortable with then you run the risk of shopping for a new home, finding the one you LOVE, making an offer, and when you finally speak to the lender you find you cannot qualify for that much house, or your find your payment will be to high and you are not comfortable with it. At this point you risk not only the embarrassment to yourself and inconvenience to the seller but possibly the loss of your earnest money deposit you gave up front when you submitted your offer to the seller.

NEGOTIATING YOUR OFFER WITH THE SELLER: When you have your pre-approval letter up front, your agent will submit it with your offer. This adds strength to your offer. It also lets your agent know what assistance you may need when you put your offer together. If you need assistance with some or all of your closing costs, this needs to go into your offer, if you need assistance with your down payment; this needs to go into your offer. When your offer is complete with all of this addressed upfront, the seller knows you are a “serious” buyer and have done your homework upfront. If there is another buyer making an offer that has not done this upfront, your offer will have more strength.

Jan Wood
Real Estate Broker