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Being pre-qualified means you
simply called the bank and told the loan officer
what you make, and how much your monthly installment
payments are. The lender will run the front
and rear end ratios on you and give you a general
idea of what price house you can afford. He
doesn't confirm your income or even run a credit
report on you to confirm what you told him.
How good is that?
Being pre-approved means that you have been
to the lender and they have agreed to give you
a loan. You have furnished the lender with verification
of your income, assets, cash on hand and job
stability. In addition, you have allowed the
lender to run a credit report on you to confirm
you are a good credit risk.
Once all of this has been completed by your
loan officer, he will give you a letter stating
you have been approved for a loan subject to
you finding a home and having the house appraise
for a predetermined loan to value (LTV) ratio.
(e.g. an 80%, 90% or 95% loan).
This letter can (and should) be given to the
"Seller" of your new home as written
documentation to confirm that you are qualified.
The only intangible they are faced with after
accepting the letter is if the house they have
sold you appraises for the sales price. You
and the Seller both should be confident that
the contract price is fair based on both of
you having researched comparable sales in the
immediate neighborhood.
Get PRE-APPROVED from a lender you can trust!
Being pre-approved puts you in a much stronger
bargaining position when you finally decide
which home you want to buy.
Many times "Sellers" receive multiple
offers on their home the first day they put
it on the market! This situation happens every
day in the real estate business! One reason
is that there are so many buyers looking in
any given price range. Buyers will jump all
over a really nice home that comes on the market
that doesn't require a lot of work after they
move in! Really nice, clean homes located in
popular neighborhoods sell unbelievably fast!
I want you to mentally change places with the
"Seller" for a minute. Let's pretend
your listing agent brings you three contracts
on your home at one time! How will you choose
the best one? How will you know the person can
get a loan and will not renege due to a hidden
unknown problem that does not surface until
just before closing, just after you moved out?
Would you choose the buyer who says he gets
loans all the time and isn't worried about getting
a loan on this home. Buyer number two says he's
called the bank and been pre-qualified for a
loan to buy your home. Buyer number three presents
you with a pre-approval letter and ask what
date is most convenient for you to move. In
addition he gives you a letter from the bank
advising you that he doesn't need to sell his
present home (even though it's under contract
to be sold) in order to close on your house.
He also wants to assure you that you don't have
to make a double move because your new home
that is under construction. Which one would
you pick?
I highly recommend the following lenders. They
are among the best in town. You can be assured
you can depend on their word. They will tell
you exactly the way it is. Their rates are always
competitive. Their customer service, ability
to get things done and experience is outstanding.
When I use these lenders I know I don't have
to worry about surprises. They do things right
and on time!
You can be pre-approved
in less than one day if you know what you're
doing!
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