Before a buyer begins shopping for a home, they should undergo the pre-approval process, a crucial early step in the home buying process.
Key Reasons to Get Pre-Approved
- Defines Your Budget: Pre-approval gives you a solid understanding of how much a lender is willing to lend you, based on an in-depth review of your financial information and credit history. Having a budget allows you to focus your home search on properties within a realistic price range.
- Strengthens Your Offer: In a competitive housing market, a pre-approval letter signals to sellers and their real estate agents that you are a serious, qualified buyer who has sturdy financing. It can give you a significant advantage over other potential buyers who are not pre-approved, making your offer more appealing.
- Accelerates the Process: The pre-approval process requires a substantial portion of your financial documentation (proof of identity, income, assets, and debts) and since it has already been gathered and verified during pre-approval, the final loan application and closing process can go much quicker once your offer is accepted.
- Identifies Potential Issues Early: The rigorous pre-approval process can uncover potential issues with your credit report or other financial details (a high debt-to-income ratio or an error on your credit report). By addressing these roadblocks early in the process, before you are deep into a transaction, can prevent delays or the deal from falling through later.
- Gives You Negotiating Power: With a pre-approval in hand, you have more confidence and flexibility when negotiating price and terms with a seller, who is motivated to work with a buyer who presents a lower risk of financing failure.
How to Get Pre-Approved
- Meet with lenders and choose a lender
This is a vetting process. You want to find a lender who works well with you. Consider pricing, performance, and communication. - Submit all the required paperwork to your chosen lender
Typically, recent paystubs, W-2’s, tax returns, banks statements, debt information, and anything else the lender asks for - Get pre-approved for your home loan
Then your home search can begin!
I have a list of local lenders who I have established a good working relationship and I trust to get the job done. There may be an advantage to working with a local lender. Ultimately, it is your choice and you may work with a lender you select. Contact me today to for help finding a lender!