Doug and Melanie Sedam
* Serious home buyers need to start the process in a lender’s office, not at an open house.
* Most sellers on the resale market expect buyers to have a pre-approval letter and will be more willing to negotiate if you do.
* All developers will want you pre-approved (and most times with their in-house lender) before they will even take a deposit on a home that is currently in inventory or to be built in the future.
* Before you shop for a home, unless you are paying cash, a mortgage pre-approval is your number one home buying preparation tool.
* A pre-approval will tell you what price range you are in.
* Realtors, sellers, and developers will not take you seriously without it.
* Your mortgage process will be smoother and faster with a pre-approval.
Those advantages should be enough to convince you, but then why do over 42% of homebuyers go shopping for a home without mortgage pre-approval?
Suppose you ignore this advice and hit the virtual tours in a hot market. What if on day one you fall in love with a newly listed home? That could be a problem because, unless you are paying cash, no one will take your offer. A new trend in the real estate industry, that started in California and has spread to several other states, is that you must submit a pre-approval letter before you can even view a home in person!
A young couple that we became associated with through the real estate company we own found out the hard way. They jumped the gun and began their home pursuit by searching for properties online. Once they found a few homes they liked, the couple contacted us about going to preview properties for sale. We asked if they had a mortgage pre-approval letter. John and Linda told us that their credit and finances were impeccable, everything was in order, and there would be no problems. They told us that they had a friend in the mortgage business who could write them a pre-approval letter when they were ready to submit an offer. We stated that we would need to receive that pre-approval letter and then speak with their lender on the phone prior to previewing any homes. We did not hear from them for several weeks, and they went out and wrote an offer that was accepted by an inexperienced real estate agent who agreed to terms and allowed his seller to sign a contract with this couple, provided they deliver a pre-approval within 72 hours of acceptance. To add insult to injury, this couple discovered that their finances were not as impeccable as they had believed. They could only qualify for about 80% of the purchase price on the home that they had agreed to buy. That is when we got the call, as we have owned a mortgage company for over 30 years. Now they wanted our assistance, not in selling them a home, but bailing them out of a situation. This was all because they ignored our advice to get properly pre-approved before looking for and buying a home.
It is a very hot market right now in just about every part of the country. This means that sellers can be pickier when choosing what offers they are willing to accept, and homes are going for more than asking price.
In a hot seller’s market, inventory tends to be scarce. Getting pre-approved gives you a leg up on your competition. A mortgage pre-approval allows you to make an offer with confidence and shows that you are a serious buyer with the means to purchase a seller’s home. It also gives you the knowledge you need if you have to overbid on the asking price to secure the home.
To secure a mortgage pre-approval, you must complete a mortgage application and submit all required documents. These can include (but are not limited to):
* Pay stubs and W-2s (typically two years)
* Tax returns (typically two years if self-employed or you earn commissions or bonuses)
* Bank, retirement, and investment account statements (two to 12 months, depending on loan)
* Financial statements (if self-employed)
* Letters of explanation for credit blemishes
These are just the start of documents that a mortgage lender will ask you for upfront to get pre-approved.
The Home Loan Pros has been in business over 30 years and is very proficient in getting our clients, with the properly submitted paperwork, a pre-approval in less than one-business day. Just call Melanie Sedam of The Home Loan Pros at 520-829-5219 ext. 1 to get the process started.