Why You Should Get Preapproved For A Mortgage Before House Hunting
If you’re in the market to purchase a home, you may realize the inventory of available houses is limited and competition is stiff. If you’re looking to buy an already existing home, you’re in for a challenge, because it’s definitely a seller's market.
The National Association of REALTORS® releases a monthly report on the number of existing home sales across the country. Homes are only on the market for an average of 18 days, according to the latest data released for October 2021.
In the market for new homes, there are 6.3 months’ worth of housing inventory available as of October. For context, a market is generally considered in balance if the amount of inventory available is 6 months’ worth.
Although competition is fierce and you can look at a house without a preapproval letter, one of the best things to do is make sure your financing is lined up by getting preapproved before you even start shopping for a home.
Let’s discuss the advantages of getting your mortgage approval before you go shopping for a home.
Can You Look At A House Without A Preapproval?
It's possible to look at houses without a preapproval. However, if you’re serious about buying, it’s not recommended. Consult with your lender to determine your budget and monthly mortgage payment. A preapproval letter will not only help you during the house hunting journey, but it also tells sellers that you’re a reliable home buyer.
Advantages Of Getting A Mortgage Preapproval Upfront
There are several benefits to getting preapproved for your mortgage financing right upfront. Let’s run through them.
Get A Showing Faster
In some markets, real estate agents are refusing to show homes to potential buyers who don't have an updated preapproval letter. Getting this step out of the way before you start house hunting will ensure you’re able to jump on any house that catches your eye.
Make Your Offer Confidently
If you’re looking to make an offer on a home, having a preapproval will help you understand whether you’ll be able to afford the monthly payments. There’s no sense in guessing.
Comfort The Seller As A Low-Risk Buyer
Getting a mortgage preapproval before looking for homes doesn’t just give you confidence. Knowing your qualifications have been checked in advance also gives a seller comfort when dealing with you. They know your offer is less likely to fall through if everything has been verified by an underwriting team. In a seller’s market, some sellers may not waste their time with buyers who haven’t been preapproved.
Making sure the deal goes through is one reason that in the past a seller may have preferred to take a cash offer. With the backing of a preapproval, you and the seller will know that you have the financial credentials to back up the offer you’re making.
Advantages Of A Verified Approval
The mortgage preapproval process can be even easier with a Verified Approval with Rocket Mortgage®. When Rocket Mortgage gives you a Verified Approval, we not only pull your credit to get an idea of your debts – we also verify your income and assets through documents like pay stubs, tax returns, W-2s and bank statements. This analysis is completed upfront by our team.
After we receive all your documentation, you’ll be given a Verified Approval Letter that will give you and the seller the absolute confidence that you can afford the offer you’re making. Rocket Mortgage is confident in our preapproval process so we guarantee it.
The Bottom Line
You should get preapproved before looking for a house, but only if you are serious about purchasing within the next 3 months. Otherwise, you risk hurting your credit score if you decide to pause on the home buying process.
You can get started online through Rocket Mortgage. If you would rather talk through your options with someone, one of our Home Loan Experts would be happy to help at (888) 452-0335.
1Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, debt, property, insurance, appraisal and a satisfactory title report/search. If new information materially changes the underwriting decision resulting in a denial of your credit request, if the loan fails to close for a reason outside of Rocket Mortgage®’s control or if you no longer want to proceed with the loan, your participation in the program will be discontinued. If your eligibility in the program does not change and your mortgage loan does not close, you will receive $1,000. This offer does not apply to new purchase loans submitted to Rocket Mortgage® through a mortgage broker. Additional conditions or exclusions may apply.