Why Get Pre-Qualified?
1. It doesn't cost anything to get pre-qualified and they can usually do it over the phone in 20 minutes. Why wouldn't you invest 20 minutes of your time before spending weeks or months looking? It's like buying the cart before the horse. Make sure you can get a horse before shopping for carts.
2. FHA or Conventional? If you don't know what type of loan you qualify for, you're shooting yourself in the foot. Certain properties are not FHA approved which means you would not be able to get a loan for those types if you are limited to an FHA loan which is typically for first time buyers or those with limited down payment funds. No need to waste time looking at non-FHA approved homes.
3. You’d be shocked to hear how many people cannot qualify when they thought they could. Or, more often assume $200k is their budget when really it is $150k which puts most people out of the market. Some buyers are also limited to FHA loans (a.k.a. 1st time buyers), which also means only homes FHA approved are available. Looking at non-FHA properties would therefore be a waste of time. Credit report errors, identity theft, and unseen debt ratio's happen quite frequently.
4. It shows sellers and agents you are serious. The reason certain sellers and agents only want pre-qualified buyers is to limit wasted time which shockingly to hear is about 90% of our day. That means 9 out of 10 people we work with end up not buying a home and since we only get paid on commission, we as agents work very hard to save everyone time from start to finish. NEW agents often learn this the hard way by spending months showing houses to someone who later learns they cannot afford or qualify for the home they want.
5. You could lose the home of your dreams! Again, you would be surprised how many times we've found the PERFECT home on a Friday night and while waiting for your bank to open Monday for you pre-qualification, the home is sold to an already qualified buyer. In the eyes of a seller, a non-qualified buyer is the same as no buyer.
6. It helps determine your monthly budget and limit including taxes, insurance, or optional HOA fees.
In summary, what home owners and agents ask is that you invest 20 minutes of your time before asking for 1+ hours of our time.