Why is a Pre-Approval so Important?

I get asked the question a lot "I'm thinking about buying, where do I start?" I'm always excited when people ask me this instead of something they heard off a Bravo show like "What is the price per square foot on this 900 square foot condo?". Asking an agent where you should start is important. If that agent tells you anything besides "you need to speak to a lender," find yourself a new agent. The pre-approval is the most important part of the buying process! Read that last line a few times and get it ingrained in your head. IT NEEDS TO BE DONE FIRST!!!

Why is a pre-approval so important? Well, you cant build a house without building a foundation first right? Well, you can't make an offer on a property without a pre-approval (unless you are paying cash, which is a whole other story). 

Getting a pre-approval is not a difficult process. But I highly suggest asking your agent for a recommendation and speaking to a few lenders. Don't get trapped by the promotions of getting approved quickly you hear on TV or the radio, they are not the same as speaking with a true lender. As with agents, not all lenders are created equal. But it is important to work with a lender who knows what they are doing and has done loans in Chicago. Chicago is a unique market and not all lenders can get loans approved here. Trust me I've seen it a million times where a buyer goes with some big bank who promises them the world, then completely under delivers. Smaller local banks are usually your best option since they are focused on the Chicago market and know what it takes to lend on the different types of properties here. I also mentioned earlier about speaking to multiple lenders. I always suggest speaking to at least 3 lenders and having them compete for your business. Lenders know you are speaking to other lenders and they need to work to earn your business. When you are speaking to them do not just get hung up on the interest rates. Also, discuss what fees the lender has and if there are any lender credits they offer. Make sure to work to get the best deal you can get and be comfortable with the lender you choose. Most important, these people are going to know your financial situation so you have to trust them. 

Finally, you should never look at a property seriously without a pre-approval. Imagine if you found the home of your dreams and you want to make an offer but have to wait a day or so to get a pre-approval and in that time it gets sold. You would be devastated. So make sure you get this done first so you are ready to act quickly and pull the trigger on any home you want to buy!