The hunt for a house is often the most fun part about purchasing a new home. You look online at sites such as Zillow, and you get an idea of what you want to look at. Then, you find a real estate agent and start looking at homes, but do you really know what you can afford? When you start off with a real estate agent, you get the cart ahead of the horse…as the old saying goes. You should really start by finding a lender and discovering what it is that you can afford.

            If you are casually considering moving, a soft search on the internet is totally appropriate. Dreaming about your future and finding out what’s available never hurts. However, a real estate agent only knows what you tell them about your financing, and you might be wrong when it comes to the amount you qualify for in a loan.

Pre-qualification vs. Pre-approval

            Pre-qualification only tells you what you may be able to afford according to how much money you make. It does not tell you if anyone will actually give you a loan. Pre-approval ensures that you will qualify for a loan following a credit check. If you don’t go to a lender first, you may be looking at homes when you don’t actually qualify for any loans. Especially if you don’t check your credit regularly, there may be some surprises on there that you didn’t expect. Surprises can take a lot of time to correct on your credit.

            You may think that going to a real estate agent without seeing a lender first is a waste of the real estate agent’s time. What is more important is that it is a waste of your time AND emotion. Not only do you need to know how much you can qualify for in a loan, but you need to mentally wrap your mind around those limitations. If you have your heart set on a 600,000-dollar home but can only be approved for $350,000, it can be emotionally draining. Instead, set your sights on those homes that fall within your budget. Speaking of which, your lender can help you budget for a home you can afford. Being approved for a $500,000 home doesn’t mean that you will be comfortable with the house payment. Speaking with a lender before looking for a home allows you to set realistic expectations.