Ready To Buy? Get Pre-Approved!

Ready to Buy? Get Pre-Approved!

So if you are ready to buy, the next step is to get a pre-approval. Unless you are paying cash for your home, you would need some type of financing for the purchase of your home. By getting pre-approved starts the loan process, thus narrowing your home search to a number that you can afford.

Where can I start?

You can start the loan process at any financial institution, that you choose; it is really up to you as to who do you prefer to allow during the home buying process; such as your own personal bank, credit union, your Realtor's in-house loan officer, or a mortgage broker. It's really up to your preference.

Pre-Approval vs Pre-Qualified

Depending on your financial history, the loan officer might decide to give you a Pre-Qualification -- meaning that it is only the loan officer's opinion on loan financing approval; there is no verification nor formal approval given. For example, if you have a great job making $200,000 per year with little to no debt and you stayed with your company for over 2 years, the loan officer could give you the green light without verification or researching your current status. Because of the uncertainty of what you can afford it could lead to danger, with you possibly looking at a home that you cannot afford.

Pre-Approval is when the loan officer has gathered all required documents such as W-2, tax returns, pay stubs, proof of employment, housing verification, etc. and researches to determine the amount that you can afford in house. You would get an official letter and is more of a guarantee as to what homes you can afford and what price ranges you can look at.

In order to look at homes as well as to save time,  most Realtor's prefer to see the pre-approval letter before taking a client to view properties. In addition to, it is required when placing an offer on a house.

Is There an Expiration Date?

Yes, there is an expiration date on the pre-approval letter. The duration normally ranges between 30-60 days. If you need additional time, you can request your loan officer to extend the approval until you find the home that you would like to put an offer in.

What Makes Me Pre-Approved?

Depending on the type of loan you are applying for it depends on your credit score, employment history, debt to income ratio, and savings towards a down payment.

What if I am Not Able to Get Pre-Approved?

All is not lost! You can still achieve home ownership, it would just take hard work and dedication. The biggest issue that I've ran into is credit scores. If it is your credit score, you can get help from your loan officer; they would have an available program to help fix your credit. Depending on who you are working with, their companies might require a score of 640 before issuing a pre-approval, while there are some officers can work with a score as low as a 580.

There are many different types of loans that you may get. I will cover the types of loans you can get in another posting.