News and Events
September 24, 2007
Why Should I Get Pre-Approved?
Why Should I
Get Pre-Approved?
Whether you are buying or selling a home, the real estate
process can be stressful. Getting
pre-approved is a great way to take that first step and help reduce that
stress.
Many people make the mistake of going house hunting without
knowing exactly how much they can afford. Not knowing can lead to frustration
when you find that dream home, but find out you cannot afford the loan. This frustration can often lead people to
give up on the home buying process.
While understandable, that stress can be avoided by getting pre-approved
before you start the home search.
Getting pre-approved
by a lender involves going through the full mortgage application process. You
are going to fill out all the forms, provide income verification (tax returns,
pay-stubs, etc.), have your credit run and so on. The lending institution will
do a full analysis to determine what price range and house payment is within
your buying power. It also lays out any
requirements you may have to meet; such as down payment or housing requirements
your home must meet. The pre-approval
process will get you started and will solely be the approval of you the
borrower. The approval will always be
contingent upon the appraised value of the prospective home, as well as any
title work involved.
Once a lender approves you for a loan, the lender will issue
a pre-approval letter. This letter
details the specific amount for which you have been approved, any conditions
that may need to be met, and how long the pre-approval will last.
The pre-approval letter is an extremely valuable piece of
information. It not only allows any
seller or real estate agent to know exactly how much you can afford, but it
also may give you an advantage over other buyers who may be bidding on the same
home. A seller will be more likely to
accept the bid of an approved buyer over one who may not be approved.
Whenever possible, get pre-approved for a mortgage before
shopping for a home. It will save untold amounts of stress and make the buying
process much easier.
