Did you know that most local home buyers require a loan before purchasing real estate?  I know…I was really shocked when I learned that one.

The majority of home buyers also know that unless they are paying cold hard cash when purchasing a home, they will need to secure financing from a lender in order to complete the sale.

However, what many potential home buyers do not know is that they should actually have financing secured before they even start looking at homes to purchase.

Sure, you can look at homes online all day and kick the tires with a real estate agent with a lot of free time on their hands, but potential buyers need to be pre-approved for a loan to purchase a house by a certified lender before any serious consideration can be made for purchasing a home.

There are three reasons why home buyers need to be pre-approved for a mortgage prior to shopping for a home.

First, without being pre-approved and underwritten for a loan, there is no way to accurately know how much money someone will be able to secure in the form of a loan when purchasing a home.  

If a home buyer has $25,000 saved for a down payment and closing costs and qualifies for a $225,000 mortgage, she should only look at homes her Realtor® believes can be purchased for $250,000 or less.

Second, a home loan pre-approval lets the buyer know the purchase price he can truly afford based on the amount of his down payment, the prevailing mortgage rates, monthly payments, available financing options, and other factors.

To use the $250,000 house as an example again, if a home buyer’s monthly payment will be $1500 and he can only comfortably afford a $1200 payment, he may want to consider a less expensive home.  

On the other hand, if the buyer is comfortable with a higher monthly payment, he or she may be able to consider more desirable homes at a higher price point.

Finally, in the current local real estate market and throughout much of the Carolinas, we are still in a seller’s market, meaning that home buyer demand exceeds the number of homes currently available for sale.

A quick review of Economics 101 will remind you about the rule of Supply and Demand.  

When demand is higher than supply, price and competition among buyers increases.

In today’s real estate market, most home sellers will not consider an offer to purchase their home without written confirmation from a reputable lender that the buyer is qualified to purchase their house.

If you are considering buying a home in Waxhaw, the first thing you should do is contact a local Realtor® who knows the market for an initial consultation and ask him or her to refer you to at least two or three reputable lenders who will have your best interests in mind.