"It happens every day," says Patty Da Silva, a real estate agent and owner of Green Realty Properties in Davie, Florida. "I can't believe I still get offers today without a preapproval."
As with many other agents and sellers, Da Silva says she rejects offers from buyers who don't have preapproval letters from their banks.
"You have to have a preapproval and it must be a real preapproval where the lender has verified not just your credit, but bank statements, tax returns -- and I call the lender to verify that," she says.
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No. 4: You need to know where you stand
Some buyers put off the loan application because they fear a lender may not approve them for the amount they plan to spend to buy the house, Highfield says.
"It's like when people don't go to the doctor for their annual checkup when they are afraid to find out what's wrong with them," he adds. "That's the same thing with getting preapproved."
Others simply don't want to share an abundance of private information with a lender until they actually find the home they want, he says.
No. 5: Loved ones can't approve you for a loan
It's typical for potential buyers to assume they qualify for a certain mortgage amount based on what a neighbor, friend or relative with a similar credit profile bought, Roth says.
A survey by NeighborWorks America found that nearly 4 in 10 people who are thinking of buying a home first seek advice from friends and family who own a home. Only 16 percent say they approach a real estate agent for advice in that early stage, and mortgage lenders are approached only 9 percent of the time, according to the survey.
You are beyond compare
Even if you pay your bills on time and earn about the same as the friend who just got that $300,000 mortgage, don't assume you qualify for the same loan.
"A credit score difference of 700 to 680 can severely affect one's ability in terms of down payment," Roth says.
Getting preapproved before you shop for a loan also allows buyers time to fix unexpected errors on their credit reports, Da Silva adds.
"There are 40 million errors on credit reports," she says. "You need to have time to fix that if you happen to be one of them. When you find the house that you want, you do not have time to get preapproved, and if somebody else has it, there's no way the seller is going to look at your offer."
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