In today’s video, Keith Renno discusses what is needed before you look for a home to buy.
When contacting a real estate agent about buying a home it’s very likely one of the first questions you will be asked is, “are you pre approved for a loan and do you have a letter that supports that? In some localities the letter may be called a pre approval letter and in others it might be referred to as a pre qualification letter. Also, it’s important to know, depending on your location there may be some differences between pre approval or pre qualification so be sure to double check that first.
Your pre approval letter lets the seller know that you are qualified to purchase the home. This does not imply you are going to buy the home. It just serves as proof that, should you choose to do so, you have the financial backing and are qualified to move forward with a purchase.
How to Obtain a Pre Approval Letter
Meet with your lender to review your income, credit rating, available funds for down payment and exploring the different loans available. The lender will be able to share the numbers so you know where you stand and how much you’ll be able to spend on a home. You can then be confident when submitting your offers, knowing you can in fact move ahead with a given purchase.
Best Time to obtain Pre Approval
If you are even considering buying a home, obtaining pre approval is the first step. Some buyers delay, thinking they don’t need to consider loan requirements until they are immediately ready to buy. I can tell you, from past experience this thought process often leads to disappointment. Why? As an example, say you find that one perfect home and want to make an immediate offer. Your agent explains, to have any chance at having your offer accepted, you need to also submit your letter. Problem is, legitimate lenders must do their due diligence to verify your information. You must provide all your financial information for the lender to review and this takes a bit of time. Yes, we can react quite quickly but even if it only takes a couple days, you’ll probably be too late and the home will be sold to another who already had their pre approval in hand.
As outlined above, it really makes little sense to start looking for a home until meeting with a lender to determine where you stand financially. Yes, we understand why buyer seem to want to avoid this meeting but if you really are serious about buying, it’s absolutely necessary and better to get done sooner rather than later.
I hope you found this post helpful and if you are currently looking for real estate, I wish you the best of luck with your search. Please feel free to scroll down and leave a comment.
Senior Loan Originator
Over the past 15 years as a mortgage professional, closing on average 150 loans per year, I have gained a wealth of knowledge and experience about the mortgage industry. My goal with this website is to give you just the INFORMATION you need about mortgages with ZERO sales pitch. I hope you find my posts of value and share it with 1 other person who might find value in it as well.