Pre-approval wasn’t my first step when buying a home: Here’s why

  • Normally I would have applied for pre-approval from multiple lenders before buying a home.
  • Instead, I first met with real estate agents to find out where in the area I could afford to live.
  • My broker gave me tips on choosing a lender and I ended up only applying to one company.

In my 2+ years as a mortgage reporter and editor, I’ve learned the importance of a preapproval letter.

When a mortgage lender pre-approves you, they’re saying they’re happy to work with you, subject to certain conditions. The letter states what type of mortgage you are eligible for and the amount the lender will lend you. Showing your pre-approval letter to a seller can put you one step ahead of other potential buyers, so it’s usually important to have a letter before you start buying homes.

But applying for pre-approval wasn’t my first step in the homebuying process — although I’ve thought for two years that it should be. I wanted to take another step first.

I wanted to speak to a realtor before doing anything else

When you apply for pre-approval, the lender performs a hard credit pull, which hurts you


. Before taking that step with a lender or lenders, I wanted to meet with a real estate agent to find out if my husband and I are even in a good position to buy based on the local market right now.

We met up with a real estate team recommended by friends who had used these agents over the years in both buying and selling their home. We spoke about our budget and what we wanted in a home, and the agents were honest with us about which areas we could afford to search.

They also walked us through the entire home buying and mortgage application process in that first meeting, including any additional costs that we may not have considered. By the end of the meeting I was confident that we were ready to start the home buying process.

Then they asked if we already had a lender in mind.

The agent directed us to a good mortgage lender

My husband and I originally thought we would apply for pre-approval from a local credit union. We thought a small, community-focused business could have good customer service. We had talked about working with the credit union we went through when we bought our car as they gave us a fantastic interest rate on the car loan.

Then the agents told us that probably wasn’t the best idea.

The seller’s market today is hectic and fast-paced, and many

credit unions

work only during normal business hours. So if we needed to look at a house after dinner and discuss details before making an offer the next day, we might not be able to reach anyone.

The brokers told us that credit unions also often work with members only, so in the past our agents have had problems trying to call a credit union about a mortgage, but the credit union would not speak to them if the member was not present.

These were all factors we never considered and I’m glad we didn’t waste time getting pre-approved by a company that wouldn’t have been a good fit for us in this market.

Instead, the brokers said they had a handful of lenders that they work with regularly and have had good experiences with. We decided to work with the lender and loan officer that our agent used when he bought his home. We walked out of the meeting and almost immediately contacted the loan officer to discuss pre-approval. The following weekend we toured houses for the first time, finished with our letter.

My approach ended up being the best for our home buying journey

In a “normal” housing market, one of my top priorities would have been to scout for lenders and get multiple letters of pre-approval. But in this market I knew we had to act quickly. It was not uncommon for a home to be listed on Thursday and offers reviewed on Monday – assuming the seller didn’t take an early offer over the weekend.

Our loan officer was good at his job and knew we were working with real estate agents who gave him business on a regular basis. He was almost always available to us, answering calls and texts at night and on weekends. We felt comfortable working with him because not only did our agents use him when they bought their home, but our friends who had been recommended to us by our agents went through him and had good experiences.

He was also able to complete the house three weeks after accepting our offer, which was one of the quickest turnaround times I’ve heard of. We knew this could appeal to sellers looking to get out of the house quickly.

In retrospect, I might have done one thing differently. I would have asked our real estate agents for the names of all the lenders they were willing to work with and requested pre-approval from each so I could compare interest rates and terms.

Still, I don’t regret it. Buying a home in today’s market was stressful and scary, and having a loan officer I could rely on was just one less thing to worry about.

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