Wednesday, May 21, 2014

Of Beauty and Disappointment: Why you should Prequalify



Unless you have a couple hundred thousand dollars sitting around, you're going to need to qualify for a loan in order to get a home. I feel like that's pretty simple logic. What you may not have considered, however, is that you should prequalify for a loan before you look at any homes.

You see, I have learned from personal experience that one of the cruelest things you can do to a home buyer is show them a home they can't afford to purchase. I love my home in Orem, but to this day I can tell you everything about a nice place in Springville that got away from me.

The importance of prequalification, however, was driven home to me recently when I attended a board tour with the Utah County Association of Realtors.

There were three homes on the tour. The first was going for about $850,000, the second for $500,000, and the last going for $200,000, just below the median price of homes in Utah County. (It was $212,000 in April, if you're curious.)

You can probably see where this is going.

Yep.
By DXR (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
The million-dollar home was gorgeous. For copyright reasons, I can't post the pictures of the home here, so here's a link to the listing for the home on the MLS. Look at the pictures.

Before we go any further, I want to tell you: Do you want to buy that home? If so, call me right now. I'll drop everything and help you.

Anyhow, after spending some time in that home, we went to the one that was listed at half a million dollars. Out of respect to the sellers and the listing agent, I won't post links here, but here's the thing: I walked into the $500,000 home and though, "Huh. That's nice, I guess."

It was a beautiful house in a great neighborhood. It will make a great home for someone who isn't coming into it right after seeing the $850,000 one. But all I could see was that it wasn't the million-buck one.

Anyway, next we went to the sensible $200,000 home, and you can guess what that was like.
By Nat Edwards [Public domain], via Wikimedia Commons

I was talking to a couple other agents at the home, and we were discussing how the tour, in all honesty, probably should have done the homes in the opposite order.

So that's my point. When you get prequalified, you know right off the bat what you can afford, and you know not to look above that price range. Be smarter than I was when I was buying my home! Prequalify, and avoid finding yourself in a $500,000 shack.




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