Get Loan Pre-approval
Few people can buy a home
for cash. Most buyers, especially first-time purchasers, require a loan. But real
estate financing is not just about getting a loan, it’s about getting the loan
that's right for you. In other words, a mortgage with the lowest cost and best
terms.
Get a Pre-Approved Mortgage
Start the mortgage process
well before bidding on a home. I can recommend a mortgage source, or a mortgage
broker who’ll shop around for you. There are many mortgage options and lenders
so it pays to shop around. By meeting with lenders - either face to face or online
- and researching loan options, you will find which programs best meet your
needs and how much you can afford.
Pre-approvals are also
recommended for another reason: purchase forms often require buyers to apply
for financing within a given time period. By meeting with loan officers in
advance and identifying mortgage programs, it won't be necessary to quickly
find a lender, do a check credit and rush into a financing decision that may
not be the best option.
What is Pre-approval?
"Pre-approval"
means you have met with a loan officer, your credit files have been reviewed
and the loan officer believes you can readily qualify for a given loan amount
with one or more specific mortgage programs. Based on this information, the
lender will provide a pre-approval letter, which shows your borrowing power.
You can visit as many lenders as you like and get several pre-approvals, but
keep in mind that each one does a new credit check, and too many credit checks
could adversely affect your credit rating.
Although it is not a final
loan commitment, the pre-approval letter can be shown to listing brokers when
bidding on a home. It demonstrates your financial strength and shows that you
have the ability to go through with a purchase. This information is important
to owners since they do not want to accept an offer that is likely to fail
because financing cannot be obtained.
How Do You Get Pre-approval?
Real estate financing is
available from numerous sources, including mortgage brokers, mortgage
companies, banks, and online lenders to name a few. I may suggest one or more
lenders that are known to offer competitive programs and deliver promised rates
and terms for your personal situation.
To get pre-approval you must
complete a written application and provide supporting documentation, such as
recent pay stubs, rental checks and tax returns for the past two or three years
if you are self-employed. During the pre-qualification procedure, a loan
officer will describe the type of paperwork required.
A loan officer will
carefully review your financial situation, including your credit report and
other information, and then suggest programs which most closely meet your needs
Doing your legwork and
researching mortgages and lenders ahead of time, and getting a pre-approved
mortgage gives you a clear idea of what you can afford, tells sellers you are
serious and means that you don’t have to rush the financing once you find a
home that you want to buy. It is a very important first step in the home buying
process.
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