Get Pre-Approved For A Home Loan

This is part 3 of a series of 7 articles that guide potential buyers through the home buying process. These articles provide insight and suggestions to help homebuyers find the home of their dreams.

Step One: Get Your Finances In Order
Step Two: Find An Agent

So we’re at step 3 in the home buying process and you’re probably thinking, when do I actually get to look at homes? Well don’t worry, we’re almost there. But first you have to get pre-approved for a loan. The reason you want to be pre-approved for a loan before you start shopping for homes is because when you find the right house, you need to be able to pounce. The perfect 3 bedroom 2 bath home in a great neighborhood with top notch schools is going to go fast so when you see it, you need to be able to put in an offer that can’t be ignored – which requires having all of your proverbial ducks in line.

A pre-approval on a home loan is a preliminary written commitment from a lender which states that you, the borrower, would qualify for a particular loan amount based on all of your personal finances and credit. You’ve already got your finances in order and checked your credit score so it should be quick and easy to get your approval letter from the lender of your choice.

Tip 1 – Get Pre-Approved NOT Pre-Qualified

There’s a big difference between getting pre-approved for a loan and being pre-qualified. While there isn’t anything wrong with getting pre-qualified, it’s not the same (and doesn’t carry the same weight) as being pre-approved so it’s important that you know the difference.

Pre-Qualified: When you are pre-qualified for a home loan it’s like getting a consultation from a lender. It can be done over the phone, online or in person and is usually free of charge. You simply let the bank or lender know about your general financial situation including your current debts, income and assets and then they give you an idea of what mortgage amount you will qualify for.

Pre-Approved: When you get pre-approved for a home loan you fill out an official mortgage application and provide a lender with complete documentation of your finances including your credit report, pay stubs, bank statements, etc. At this stage a lender fully accesses your ability to repay the loan and will tell you the specific mortgage amount for which you are approved as well as a rate. Having a pre-approval puts you at an advantage because in the eyes of a potential seller you are one step closer than most to obtaining an actual mortgage.

Tip 2 – Research and find the right lender for you

It’s even better if you somebody to do the research for you. Ask your realtor to put together a short-list of referrals. Ask friends and family who have recently purchased a home if they would refer you to their lender. You want to find a home loan lender who will be dependable, easily accessible and hard working.

Remember, finding the right lender is not necessarily about picking the best big name bank like Wells Fargo or Bank of America. It’s about finding the right professional to guide you through the process who will keep you and your interests first in mind. If you need to, interview several lenders before you decide on which one to trust. They should be able to set expectations for your future and meet them though clear and simple communication.

Tip 3 – Review your mortgage options

This should easily fall into place once you find the right lender but it is an important decision you need to make. There are several common mortgages for home buyers like fixed rate, adjustable and FHA loans. However, there are several more to choose from and they might fit you and your situation. Work with your lender to find the right fit for your financial situation and future.

Each lender has different loan programs so make sure you ask about them while you’re trying to narrow down your choice. Ask for a side-by-side comparison of the available mortgages and programs so you know exactly what your options are and the advantages – and disadvantages – of each. If you’ve found an agent and a lender you love, this process should be painless.

If you have more questions about the pre-approval process and securing a home loan, call or email us at First Team. With the support of the entire First Team family of companies including mortgage and escrow, our agents are fully equipped and educated to help you secure the loan you need to buy the home of your dreams.

 Email us at clientservices [at] firstteam.com

or Call 888-870-1142

Buyers - What questions do  you have about the home loan process?

Agents - What tips do you have for home buyers when choosing a lender?

Originally posted at: http://www.firstteam.com/blog/?p=7438