The Importance of Getting Pre-Approved
It is work getting preapproved for a mortgage. But if you are planning to buy a new house, this is something that you definitely need to do. Don’t confuse a pre-approval with a pre-qualification. Pre-qualifications aren’t worth much more than they paper that they are printed on. Getting a pre-approval involves your lender pulling your credit report. You’ll need to provide documentation to prove your income, bank statements, and a lot more. Because this process is a hassle, some buyers want to wait until they have found the right house before they start the process – which is a big mistake.
There are several good reasons to get pre-approved before you start your house-hunting. Here are the top four reasons:
Sellers don’t take offers without pre-approvals seriously.
An offer without a pre-approval is risky for the sellers. They are very unlikely to even seriously consider such an offer – much accept it. You are a stronger and more serious buyer if you’ve gone to the trouble of getting pre-approved and the sellers know this. Part of the strength of your offer is that the seller knows that you can actually afford the house at the price you offered.
You focus your house hunting efforts on houses that are realistic for your price range
It can be heartbreaking for buyers to find the perfect house, make an offer and then find out that they can’t afford that house. And that isn’t just about “the perfect” house. It happens often that buyers get their hearts set on a certain price range – only to find out that they don’t qualify for that much and have to shop for houses that aren’t nearly as wonderful as they thought they could afford. You'll know exactly what the maximum you can spend on a house when you get pre-approved – and you won’t be wasting your time looking for houses that you can’t afford.
Dealing with problems with your credit or documentation before you go into escrow
Have you checked your credit report lately? It is common that there are errors in credit reports. Getting your pre-approval (and having the lender check on your credit) allows you the opportunity to work on problems and errors before you are in contract. Once you are in contract, “time is of the essence” and there isn’t time to deal with these kinds of problems as they can take weeks and months to fix.
A pre-approval helps assure a smoother transaction
Having already cleaned up problems in your credit, submitted your documentation (those actions that you would take to get a pre-approval), your transaction is much more likely to go smoothly. It generally takes about three to three and a half weeks to get from loan application to closing (if you have already done the pre-approval process). Even though you may have already provided a lot of documentation, know that the lender will be asking for more. Doing everything you can to get those additional documents to them very promptly will also do a lot for keeping your transaction within the contract deadlines.
If you are thinking of buying a home and don’t have a good lender, we have two fabulous lenders whom we have worked with for years and can recommend to you. Just let us know you’d like to get those names from us.