Can I Look At A House Without Preapproval?

Can you look at a house without preapproval in hand when you’re considering buying a new residence? Absolutely – a mortgage preapproval is helpful to have in your pocket when you’re shopping around for a home, but not a prerequisite. That said, while you certainly can look at a house without preapproval, it’s only recommended if you’re in the earliest stages of planning to buy a home.

Let’s take a closer look at why it’s worth your time to get preapproved for a mortgage before you start formally looking for your next residence.

What Is A Preapproval Letter?

A preapproval letter is a document from a financial lender that states that the lender is potentially open to lending you money in an amount up to a certain limit. While real estate agents and home sellers don’t always need to see one before they start showing you houses, they do find preapproval letters helpful (and some won’t show you homes at all until you have one). That’s because a preapproval letter generally implies that you’re creditworthy enough to make a purchase of the home. In effect, while a preapproval letter is not necessary to  begin visiting real estate properties, it does help provide real estate agents and sellers with greater peace of mind that you’ll ultimately be able to seal the deal.

Why Should You Get Preapproved Before Looking?

Real estate agents prefer to show homes to buyers who have preapproval letters because it implies that they’re a serious buyer who is financially qualified for a proposed purchase. Sellers also like to see a preapproval for similar reasons. It suggests that you have enough money to back up a proposed offer if you choose to extend one. A preapproval letter is not a binding contract, but it does serve as a form of upfront verification that gives partners the confidence that you’re able to qualify for a mortgage should you enter into a purchase agreement.

Noting this, having a preapproval letter can give buyers a competitive edge, especially when compared to home shoppers who have not sought mortgage preapproval. With a preapproval letter, you’ll not only be able to make offers on properties faster, but you’ll also enjoy a leg up on shoppers who haven’t gone through financial screening to see if they qualify for a mortgage.

How Do You Get A Preapproval Letter?

To obtain a preapproval letter, you’ll work with a lender to complete a mortgage application. You’ll need to provide several documents that will give the lender a clear picture of your finances, including:

• Identification
• Bank statements
• W-2s
• Tax returns
• Down payment gift letters, if applicable

Your chosen financial provider will then verify the information that you’ve submitted and perform a credit check to make sure that your credit history checks out and that you’re in good financial standing. Should you get preapproved for a mortgage, your lender will then provide you with a preapproval letter. This preapproval letter is not a binding commitment, but rather a conditionally approved offer to lend you a certain amount of money that is typically valid for 60 – 90 days, depending on your lender.

Can You Make An Offer Without Preapproval?

Just like you don’t need to have mortgage preapproval to look at a house, you technically don’t need preapproval to make an offer either. However, you may find that you’ll have a hard time getting an offer accepted without your preapproval. That’s because a preapproval helps the seller have confidence that you’re able and willing to proceed with the home purchase. If you don't have preapproval and are up against another buyer who does have one, there’s a good chance the seller will pick the other buyer because the buyer’s preapproval gives them more faith that the sale will go through.

How Preapproval Letters Help Buyers

Preapproval letters make it easier for buyers to view homes, work with real estate agents and make qualified offers on properties that have piqued their interest. There are several benefits of getting preapproved for a mortgage before starting your house search, including:

• It lets you, as a buyer, know how much home you can realistically afford.
• It makes it easier to make offers on real estate properties.
• It inspires greater confidence in sellers.
• It may strengthen your ability to negotiate with home sellers.
• It can give you an advantage over competing buyers who haven’t been preapproved.

The Downsides of Getting Mortgage Preapproval Early

As with any aspect of the real estate buying and selling process, there are also certain potential downsides to be aware of when pursuing an early preapproval strategy. For example:

• It’s not a guarantee that you’ll receive a home mortgage loan for the full amount in the end.

• It comes with a time limit attached, as preapproval expires after a certain period.

• You may feel that you need to work with the issuing lender. However, this isn’t necessary, as you have the option to switch loan providers (say, to one offering a better interest rate and loan terms) before closing.

• It can slightly impact your credit score because you’ll get a new hard inquiry added to your report.

Can Real Estate Agents Require Preapproval Letters?

There are no hard and fast rules about what real estate agents can and can’t require before showing buyers different properties. Most won’t require you to have one and are free to show buyers homes regardless of whether they’ve applied for mortgage preapproval. However, some real estate agents prefer to work with clients who have already obtained preapproval letters before they start showing them potential properties to buy. This is because:

• Mortgage preapproval indicates to agents that buyers are serious.

• Having a preapproval letter reduces the risk of transaction financing falling through.

• Preapprovals help real estate agents make qualified offers on behalf of their clients.

• It serves as a form of good faith that demonstrates that you’re committed to moving forward with a real estate purchase.

Note that if you have questions about whether a real estate agent prefers mortgage preapproval, the best thing to do is be upfront with your preferred real estate agent. If you want to see houses without getting preapproved, you should communicate this to the agent before starting the house shopping process.

In addition, if you’re ready to make an offer and want to get into a house fast, also be advised: Getting preapproved before touring properties just makes good business sense. Getting preapproved can take anywhere from 1 day to several days.

The Bottom Line: You Can Look at a House Without Preapproval

As noted, it’s not necessary to have a mortgage preapproval letter in hand to look at potential homes to purchase. But a preapproval letter is still worth getting if you’re serious about becoming a homeowner. With a preapproval letter ready, not only will you communicate to real estate agents and home sellers that you’re serious about making a purchase, but also that you have your finances in order. Armed with a preapproval letter, you’ll be able to make stronger offers on properties – and can potentially beat out other less well-prepared home buyers’ offers as well. Bearing this in mind, you’re strongly encouraged to get preapproved for a home loan before looking at homes or making an offer.

Ready to start the process? Apply for initial mortgage approval with Rocket Mortgage^Ⓡ today.