Why is a preapproval letter from my lender so important?
Dear William,
I don’t have a lender yet and I want to buy a house. I go to all the open houses so I understand the market. My goal is to buy a house in the Elysian Park area. The agent I was talking to kept asking me about being preapproval letter from a lender but I don’t feel very comfortable sharing my information. I don’t have that much debt and my job is pretty secure. What should I do next so I’m ready?
Tara R, Echo Park
Dear Tara,
Buying real estate is the smartest move you could make in your life. You will thank yourself in the future. Have you ever met someone who has invested in real estate for 30 years and they regret it? No.
It’s a big red flag when buyers do not have their preapproval ready to go. Sellers with solid agents selling their home for them would never encourage their seller to accept an offer that does not have preapproval or fully underwritten approval in the offer and/or verification of funds.
The most important thing you should do to get yourself ready is to get your preapproval lined up and do it as fast as you can because rates are likely going to be going higher. Everyone is talking about it and you don’t want to be sitting around waiting because then you’ll just be paying more interest in the future. If you get a preapproval now you can lock down the rate today for an agreed period of time. I can refer some great lenders to reach out to!
In regards to not feeling comfortable speaking about your financial situation, I encourage you to find a real estate agent and professionals where you would feel comfortable talking about that unless of course you have things in your financial history you are embarrassed about or need to address and that’s what’s holding you back. Either way, it’s best to work with people you feel comfortable with and that it almost feels like a normal conversation to be speaking about your income and expenses.
Here’s a tip: Lean into your discomfort. Whatever makes you feel uncomfortable is probably something you should pay attention to and dive in a little deeper because buying a home should be exciting.
Yours truly,
William