As a buyer, you figure you can’t get any better. You’ve saved up a good down payment and have that three percent to cover closing costs. You have a great job with years of steady income to show you’re a solid investment for a mortgage company. You even have the best realtor in mind to help you find that perfect property. You’ve covered all the check boxes for buying a home, right?
Unfortunately, there is one thing you missed. One of the most crucial steps in preparing to find your dream home is getting preapproved with your lender.
Basics of PreapprovalWhen lenders preapprove buyers, they are saying that they have verified the buyer’s documentation and stated information, and determined exactly how much they would be willing to loan to that borrower. A lender usually requires the following information to grant preapproval:
- Federal tax returns
- Pay stubs
- Bank statements
- Credit reportW-2s or 1099s
Saves You TimeAs a realtor, there is nothing more heartbreaking than seeing a family fall in love with a home that they cannot afford. The worst part is, this is a completely preventable situation. Do yourself a favor and do not look at any homes until you know exactly what you can afford. This will reduce your chances of heartbreak, and honestly, save you a lot of time. Why spend hours on the internet searching for homes in areas and price ranges that are out of reach?
Considerations for SellersSome sellers will not let their listing agents allow showings for buyers that have not been preapproved. There are potential safety concerns with letting just anyone come into your home. It can also be difficult for sellers to keep their property in pristine condition, or leave for a showing at a moment’s notice.
Ultimately, someone without a preapproval could have a variety of motives for viewing a home, but buying the property may not be on the top of that list. For good reason, many sellers use the preapproval standard to ensure they are not jumping through hoops for buyers who have no intention of or ability to purchase their home.
Contributes to a Stronger Offer>A preapproval is an absolutely essential part of an offer. With today’s extreme seller’s market, your offer may not even get a response if it does not include a preapproval letter from your lender. There are usually just too many other offers that include the document, and with it a conditional guarantee that they have a great chance at being approved for a needed mortgage.
Buying a home requires some preparation, and getting approved by a lender should be on the list. Once you are preapproved, you will know your true purchasing power and really be ready to go on the search. Contact me today for a buyer consultation and get one step closer to purchasing your new home.