"Hey Shavonne! I think I am ready to buy a house. I am wanting a 3 bedroom, 2 bath, in these particular neighborhoods and I think I can afford this amount of house. What do I need to do to get started?" This is a typical conversation I have with most people and my answer is always the same. Get pre-approved. Some people don't want to go through this process and get very annoyed when told this however, it is a very important step. You may qualify for less or more than you think, you may need to repair some credit, and it also gives you better buying power.
One of the first people that approached me about buying a house when I was newly licensed told me that they had done the research online and they could probably afford a house at about $325,000. Only having a few months of experience and excited for a potential closing, I set them up on a search based on the criteria they gave me and of course they fell in love with a few of them. By the time they finally called a lender to get their approval, they only qualified for $80,000. If you haven't done any research on homes, an $80,000 house looks different than one that is $325,000. It turned out the wife had more student loans than they realized and the husband was a barber who had not been reporting all of his wages and/or tips. It is a lesson I never forgot and the disappointment I heard over the phone truly stuck with me.
A 620 credit score is generally what you need to buy a house. Most people will look on Credit Karma or another website and see where their credit score is and need try to boost the score on their own. I have seen people pay off debts and crunch numbers to get their score up, only to have someone from the mortgage industry tell them that they are not at the correct score because Credit Karma does not pull the same way that a lender pulls credit. A lender has a certain criteria they are looking for. If they would have spoken to a lender first, they could have learned exactly what to pay and in what sequence to be prepared to buy a home.
Ultimately, you cannot buy a home without being pre-approved (unless of course you are a cash buyer). In this day and age, a Seller wants to make sure you are qualified to buy their home because they are taking it off of the market for you and could be missing out on an actual qualified Buyer. A Seller does not have to accept your offer without one and the contract also states that you will have qualified within a certain time period.
It may seem like a hassle to you to get this pre-approval, however, it will help you so much in the long run. There are several lenders out there ready to help. They can fix your misconceptions about loans, help you with down payment assistance, figuring out your monthly payment with interest and insurance included, as well as finding out which loan product is best for you. If you are seriously considering buying a home, find a local lender and get pre-approved.
It will allow you to find a home you love and give you the confidence you need to buy it.