Many people would agree that the purchase of your home his going to be the largest purchase if not the most important of your life. Going out and looking at real estate is very fun and exciting, however you don’t want to get your hopes up on a house only to find out that you can’t buy it. And why would you not be able to buy it? It could be because you’re not able to qualify for it. When buying a home the first step is to get a pre-approval letter.
Why Get A Pre-Approval
The pre-approval letter takes the mystery out of what you can afford and will give you a price range that you need to be in. Getting this first step completed saves you, the lender and the seller time. The process begins when you sit down with a lender of your choice.This person is your bank, or mortgage lender which is usually recommended by a realtor if you have one. You’ll want to do this before you start shopping for homes. The lender will analyze your financial history which will give you a tentative approval for a set amount of money.
How Long Will It Take?
The lender has to sift through your entire financial history. This will include bank records, your pay stubs, payment histories and credit scores. This process can take a few days. The biggest part for you is locating all of this information and presenting it to the lender. So be sure to obtain everything they ask for before you meet with them. This is a time consuming task, which is worth it in the long run.The real estate market is very competitive, so having the pre-approval letter can make the difference in putting an offer on the home you want quickly.
The Buyers Job
Being a potential buyer, it is vital that you provide the lender all of the documentation that they ask you for. They need an accurate look at your finances to be able to accurately determine the amount you can afford to pay for a home. Some other documents might include tax returns, life insurance policies, stocks and existing real estate that you have already paid for. This helps create an accurate picture of your financial standing. The pre-approval amount will depend on all of this and your ability to pay for a mortgage.
Be sure that you walk away with a pre-approval letter, and not a prequalification letter. They sound similar but are drastically different. A pre-qualification is only a quick peek at your ability to get into the real estate market. It does not take into account all of your financial history, and is not accurate. The pre-approval letter will show exactly what price you can afford at your current budget.
The Sellers Considerations
The importance of a pre-approval over a pre-qualification is that a seller does not want to waste time selling their home. It is a long and life disrupting process having to show the home. The amount of paper work you will both have to do is considerable. All of this can fall to the wayside if a buyer cannot qualify for the mortgage of that home. Time is valuable in real estate.
Choosing A Real Estate Agent
Once the pre-approval is complete, you can now start choosing a real estate agent. The realtor can bring you to the homes you can afford with the amenities you’re looking for. Just as long as they exist in the market. Realtors are very much like conductors in an orchestra. It is their job to orchestrate and coordinate the transaction.
The great thing about being approved is the agent will know your price range and will be able to help. If you are not approved, the agent can’t do their job to find you a home that you can purchase. Selling homes is what realtors do for a living. The fastest and most accurate way for them to help you is to be approved and they can make good matches for you to find your dream home. If you are looking for a lender or a great real estate team. Give us a call and we would love to point you in the right direction.