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Key takeaway
Television shows that feature prospective homebuyers only present a small portion of the reality behind the homebuying process. While finding and touring homes are showcased to viewers, behind the scenes, propspective buyers are evaluating financing details with their lenders.
If you have ever binge-watched a television show about buying a house where TV crews follow prospective buyers throughout their homebuying journeys, you have vicariously lived through the homebuying process.
According to the 2022 National Association of REALTORS® Buyers and Sellers Generational Trends Report, 56% of all buyers stated that finding the right house was the most challenging task in the entire process. This finding helps explain why television shows about shopping for a home are so engaging.
Don’t let other people’s experiences lead to assumptions about the homebuying process.
Realty TV homebuying is engaging, but what happens behind the scenes?
During the opening scene, we watch cameras pan to couples or solo buyers in their current living situations. We watch as they hang out in their current home while a narrator tells us about their personal lives and what they do for a living.
However, for most of these shows, the mortgage lending side of the homebuying journey receives little to no camera time. By the time viewers meet prospective buyers, they have already determined how much they could afford to spend on a home while on camera.
Instead, we watch couples debate over floor plans, or we see single buyers debate the merits of one neighborhood over another with friends and family members there to provide moral support while on their journey.
We become vested in this journey and even take sides as buyers plead their cases on why they need everything on their house wish list. At some point in the conversation, the real estate agent confirms the maximum amount the buyers have budgeted and can afford to spend on their home purchase.
The budget conversation tends to be the time when a random dollar amount magically appears on the screen, but even then, viewers don't have any clue how or why the buyers arrived at this dollar amount. Instead, the focus shifts, and we now watch intently as the cameras follow these buyers as they complete back-to-back open-house tours.
Ironically, one thing that helps make these shows possible is that many of these TV homebuyers have secured a preapproval letter, which is a conditional loan approval for the financing needed to confidently start and share their home shopping journey on national TV.
Completing the preapproval process with their lender is a significant milestone, but this accomplishment is rarely mentioned or celebrated on camera.
This significant milestone helps homebuyers determine how much they can afford to borrow to purchase a house. It also allows real estate professionals to identify properties that best fit a buyer's budget.
In addition, a mortgage preapproval letter lets sellers know buyers have the financing they need to meet their asking price.
A mortgage preapproval is a conditional approval that tells you how much your lender can lend you after verifying your income and reviewing your credit history and score.
The preparation stage of the homebuying process may not make for riveting TV, but likely the reason why reality TV homebuyers can share journeys. It's also why these shows have a budget to post on the screen.
Maybe you've seen the funny social media posts about these shows where viewers are baffled as to why some buyers think they can afford to spend the dollar amount flashed on the screen based on what they do for a living or the type of house they want to purchase.
The preparation stage of the homebuying journey tends to happen off-camera, which means viewers don't get to learn how these homebuyers determine their homebuying budgets.
One thing we don't see reality TV homebuyers do is review their credit reports. Credit scores can impact many things, including whether your loan is approved or the interest rate you're offered approved.
It is helpful to review your credit report from the three major credit bureaus: Experian, TransUnion, and Equifax. Reviewing your credit reports helps ensure the information is accurate and lets you take action to address any negative issues impacting your score before you apply for a mortgage. You can also pay a small fee and request your credit score, or check with your bank to see if they offer free credit score monitoring services.
As we watch buyers visit multiple homes, we become emotionally invested in every twist and turn. We feel disappointed when they lose a bidding war to a higher offer. We get excited as we watch buyers fall in love with a house and then feel the same sticker shock as the buyers also learn the sales price.
Unfortunately, this fear can derail your homebuying journey. If you don’t know how much you want to spend or where you want to live, this uncertainty may be enough to cause you to procrastinate and put off completing any of the steps related to securing your mortgage loan.
There are ways to reduce or eliminate the likelihood that you will experience some of this on-screen homebuying drama when starting your homebuying journey.
Assessing your credit history before applying for a mortgage can help you address any issues that might hurt your credit score. This step can help determine if you are ready to complete a prequalification or apply for a mortgage preapproval.
Many reality TV homebuying programs only show what happens after buyers meet with their lender to determine how much they can afford. However, establishing your budget before shopping for a home is an important first step.
Although watching buyers make a budget doesn’t make for riveting TV, the steps they complete to determine which homes fit their budgets are why these episodes make it to the screen.
Your lender can provide you with two tools to help you determine how much you will need to budget for your monthly payment.
One is a prequalification tool, and the other is a preapproval application.
Both can help you determine how much you can afford to borrow before you start looking at the home listings in your dream neighborhood or fall in love with the home with the backyard to start that garden you’ve always wanted.
Which tool you start with depends on your goal.
Suppose you only want a rough estimate of what your lender will likely lend based on the information you enter into their prequalification tool. You can use a prequalification tool to get a ballpark amount to start your budget.
A prequalification is a preliminary look at your overall financial profile, which your lender uses to estimate how much they are likely to lend you based on the self-reported financial details you provided.
Since the lender doesn’t verify the information provided, a prequalification isn’t an official approval or loan guarantee. Instead, it gives you a starting point to create your preliminary homebuying budget.
On the other hand, if you are eager to start searching online listings or touring homes like the reality tv homebuyers on these shows, you may want to complete your lender’s preapproval application.
If you choose this option, you will give your lender permission to review your credit and verify the financial information you provide as part of the preapproval application process. A mortgage preapproval will give you a better sense of how much a lender will likely loan you based on your financial profile and credit history.
When you start your homebuying journey with a budget, you can get laser-like focus, help your real estate professional recommend homes, and negotiate with sellers based on what works best for you and your finances.
Taking a budget-first approach to homebuying can deliver the same excitement you see when the reality TV homebuyers you’ve shared an hour with finally settling into their homes.
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A preapproval is based on our preliminary review of information provided and limited credit information only and is not a commitment to lend. We will be able to offer a loan commitment upon verification of application information, satisfying all underwriting requirements and conditions, and property acceptability and eligibility, including appraisal and title report. Preapprovals are subject to change or cancellation if a requested loan no longer meets applicable regulatory requirements. Preapprovals are not available on all products. See a home mortgage consultant for details.
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