Why get pre-approved before I start looking?

Short answer

It's your ticket in, and it tells you your real budget. What I like to say to people is, "You wouldn't walk into a store to buy something unless you knew how much money you had in your wallet or what your credit balance is on your credit card."

Full answer

Because it's your ticket in. Sellers and their agents take you seriously when a lender has verified your numbers, and you can act the day a home you love hits the market. It also tells you your real budget, so you look at homes you can actually buy.

Something that I have seen happen to people who don't get pre-approved first is that they go to see a house, maybe it's at an open house, and they're just driving around. They fall in love, and then they call me up and say, "Harry, we saw this great house. We want to buy it."

When they talk to the lender and the lender tells them that they can only get pre-approved for $50,000, maybe $100,000, or $200,000 less, then that house, that dream house of theirs, is the one that got away. That makes it really hard for them to find a house that they can afford that works for them.

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