Getting Preapproved Wasn’t My First Step in Buying a House: Here’s Why

  • Normally, I would have applied for preapproval with several lenders before shopping for homes.
  • Instead, I met with realtors first to find out where in the area I could afford to live.
  • My realtor gave me tips on choosing a lender, and I only ended up applying with one company.

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

When a mortgage lender preapproves you, they’re saying they would like to work with you under certain conditions. The letter states which type of mortgage you’re approved for, and the amount the lender will lend to you. Showing a seller your preapproval letter can give you a leg up on other potential buyers, so it’s usually crucial to have a letter before you start shopping for homes.

But applying for preapproval wasn’t my first step in the homebuying process — despite thinking for two years that it should be. I wanted to take one other step first.

I wanted to talk to a realtor before doing anything else

When you apply for preapproval, the lender does a hard credit pull that dings your

credit score

. Before taking that step with one or more lenders, I wanted to meet with a realtor to find out if my husband and I were even in a good position to buy right now, based on the local market.

We met with a real estate team recommended by friends who had used these realtors to both buy and sell their house over the years. We talked about our budget and what we wanted in a home, and the realtors were honest about which neighborhoods we could afford to search in.

They also walked us through the entire homebuying and mortgage application process in that first meeting, including any extra costs we might not have already considered. By the end of the meeting, I felt confident that we were ready to start the homebuying process.

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

The realtor steed us toward a good mortgage lender

Originally, my husband and I figured we would apply for preapproval with a local credit union. We thought a small, community-focused company might have good customer service. We had talked about working with the credit union we went through when we bought our car, since they had given us a fantastic interest rate on the auto loan.

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

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

credit unions

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

The realtors told us that credit unions will also often only work with members, so our agents had trouble in the past when they tried to call a credit union about a mortgage, but the credit union wouldn’t talk to them unless the member was present .

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

Instead, the realtors said they had a handful of lenders they worked with regularly and had good experiences with. We chose to work with the lender and loan officer our realtor had used to buy their own home. We left the meeting and almost immediately contacted the loan officer to talk about preapproval. The following weekend, we toured houses for the first time, ready with our letter.

My approach ended up being the best thing for our homebuying journey

In a “normal” housing market, shopping around for lenders and getting several preapproval letters would have been one of my top priorities. But in this market, I knew we had to move fast. It wasn’t uncommon for a house to be listed on Thursday and review offers on Monday — and that was assuming the seller didn’t accept an early offer over the weekend.

Our loan officer was good at his job and knew that we were working with realtors who regularly gave him business. He was practically at our beck and call, answering phone calls and texts at nights and on weekends. We felt comfortable working with him because not only had our realtors used him when buying their own home, but our friends who had recommended our realtors to us had also gone through him and had a good experience.

He was also able to close on the house three weeks after our offer was accepted, which was one of the speediest turnaround times I’ve heard of. We knew that could be appealing to sellers who wanted to get out of the house quickly.

Looking back, I may have done one thing differently, though. I would have asked our realtors for the names of all the lenders they liked working with and applied for preapproval with each one so I could compare interest rates and terms.

Still, I have no regrets. Buying a house in today’s market was draining and anxiety-inducing, and having a loan officer I could count on was just one less thing I had to worry about.

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