It’s important to get pre-approved to know how much you can afford, but what does the bank think? It may be willing to lend you an amount that could get you into trouble financially; on the other hand, it may not be willing to lend you as much as you would like. The reason you need to know what the bank will let you borrow before you start shopping for a house is that you don’t want to think you can afford a $350,000 house, start looking, and then find out that you can only get a loan for $250,000. The features that come with the $350,000 house won’t exist in the $250,000 house and you’ll be setting yourself up for disappointment.
Finally, a seller isn’t likely to accept an offer from a buyer who hasn’t already secured financing. Why should they waste valuable days taking their home off the market while waiting to see if you can get a loan? Getting pre-approved is pretty easy. It’s just a matter of calling a lender and giving them about 20 minutes worth of personal and financial information, then following up with supporting documentation and waiting for a decision from an underwriter.