Buyer Tip #3: Getting Pre-Approved for a Home Loan
How to Prepare for Your Home Purchase
When buying a home, one of the important initial steps is to go through the loan approval process with a lender.
There is a difference between getting prequalified and preapproved. Prequalified involves running your credit report, evaluating assets and checking how much loan you may qualify for.
Pre-approval takes longer because it requires more documentation. It involves reviewing two years of tax returns. The lenders also require pay stubs going back a month as well as one month of bank statements. You will also fill out a loan application.
During the preapproval process, lenders are doing a much closer look at the financials of the buyer. After full review, the loan will be underwritten with the preapproval process & then it’s a matter of locating your home.
Once you are ready to submit an offer, click here for this buyer tip on how to get your offer accepted in a multiple offer environment.
You can also find out why it is important to have your buyer’s agent present your offer in person at this link.
Another advantage of getting pre-approved for a loan is that it saves a lot of time and makes the purchase process smoother. When you get into a contract with a seller as part of the purchase process, you want to have a smooth, seamless transaction and closing. This is a win-win situation for both you and the seller as you move thru the escrow period.
It is normal to shop interest rates online. Internet results can be misleading since rates will vary depending on your credit score, assets & loan amount. I have a team of lenders that I can refer you to if needed. Keep in mind that interest rates are always adjusting & a rate is not actually locked until you are in contract with a seller.
When evaluating a lender or mortgage broker, you want to evaluate not just the interest rate being offered but also how quickly they can close escrow & meet any loan contingency deadlines. A lot of times sellers have already moved out of their property and a shorter escrow such as 17-21 days works best for them.
This is one step in the purchase process to start. A second step is of course deciding on which buyer’s agent is the best fit for you. A future tip will include key skills to look for in a buyer’s agent.
Please reach out via email, cell, or text for any questions. I love working with first time buyers.
I’m here to help you with any questions you have about the S.F. Bay Area real estate market.
Talk to you soon.