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Which Comes First: the Home Loan or the Home?

Should a Home Buyer Seek Pre-Approval or a Home First?

Starting a home search can feel a little bit like the “Chicken and the Egg” riddle.  Should a buyer become pre-qualified for a home loan first, before finding a home they would like to purchase?   Or, should a buyer start shopping for homes before knowing what type of loan they might qualify for?

The Real Estate Division of the Colorado’s State Regulatory Agencies recommends that you should first develop an affordable price range and budget, and then contact a mortgage lender.   The lender will be able to begin the pre-qualification process so that you will have a better idea of your buying power.

The benefit to contacting a mortgage lender before your home search:

1)      You will have a better idea of the amount of loan you can obtain.

2)      When you find a home that you like, you can make a timely offer that is backed by a prequalification letter.

Sounds reasonable.  But, what if you are a first time home buyer and are uncertain of all monthly costs involved in home ownership?  How can you develop a reasonable budget?  Also, what if you, like many potential buyers are not sure which lenders to trust or how to find the best rates?

Contact a buyer’s agent first.

If you contact a buyer’s agent, they can help you solve this riddle.  If you are unsure of how to find a lender that you trust, or what kind of questions you need to ask your lender, your buyer agent can point you in the right direction.

Buyer’s agents should be able to help you work through your available monthly budget and down payment to help you arrive at a rough estimate of your price range, and the amount of loan you will require.  With this estimate in mind, you can begin your home search as well.

When you work with a buyer’s agent, you can shop for your loan and your home at the same time.

To get in touch with a buyer’s agent that is a member of the Colorado Exclusive Buyer’s Agent Association, fill in our Find an Agent form.