pre approved1There was a time when you went house hunting, put in a bid, and then you went looking for a mortgage.   Those days are gone.   In today’s market, you need to be able to show up front that you can qualify for a home in the price range for which you are looking with a Pre-Approval.   This will also you save you time and frustration when your realtor is trying to find homes for you that will fit your needs and budget.   So what is the Pre-Approval process?

First let’s clarify that we are talking about Pre-Approval not Pre-Qualification.  Pre-Qualification is when a bank or loan company calculates what price range you should shop in based on your income, assets and down payment amount.   This is usually done over the phone and no credit check is involved.  This is a great first step in the process for a buyer but frankly, there are probably 100+ sites on the web that will get you this same information without having to pick up the phone.  However, when it comes down to it, you still may not be able to purchase a home in the price range stipulated.  The credit check is really the clincher when it comes to solidifying to finding out if you can get a mortgage for the particular home you want to buy.

The Pre-Approval process is usually a bit more involved.  You may have to meet in person with the lending institution and will be asked many questions.  You will be asked to provide documentation which will include, but not limited to, recent bank statements (usually 2 months), W-2 Forms, proof of any IRA, 401K’s or Pension Plans, Driver’s license and paystubs.  During the Pre-Approval process a credit check will be run and that may lead to more documents you have to provide.  These could include recent year’s income tax returns.  If you have lived outside the country in recent years, this may lead to even more documentation.  So as you can see this process can be somewhat involved and takes time.  If you are not fully committed to buying a home, you may want to reconsider at this point because of all the documentation you have to provide and the time it can take.

Keep in mind though that having a Pre-Approval will still not guarantee that you will be able to secure the mortgage you want, or at the rate on the day you start the process.  As we all know, rates fluctuate over time, your financial position changes over time, the housing markets shift over time.  The key word here is time.  Your realtor can help you with questions on when to seek Pre-Approval.

Marie Dinsmore, Certified Luxury Home Marketing Specialist

The Dinsmore Real Estate Team  | | 770-712-7789