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Replies (9)
- Pamela Turner, "PamelaTurner"
- Contributions:7
As a Realtor with 13 years experience, I highly recommend obtaining a Pre-Approval from your lender of choice. It is not time consuming at all, in fact, it will save you time when you find that perfect home you wish to purchase. It might be better termed as "Preparation for Purchase".
- Chris Jones, "Christopher Jones"
- Contributions:135
As the very capable Pamela Turner has indicated, any good Realtor will require a pre-approval with some teeth in it before making an offer on a house. It's just way too complicated these days to get a loan to believe that anyone who wants one will be able to just on the strength of that desire.
I should distinguish between a pre-approval and a pre-qualification. You don't need the latter. It won't do you any good. But the former is a prerequisite, I should think, to making an offer. It will include a credit pull and at least basic verification of employment and assets. You're going to have to do it anyway, so you might as well get started.
I should distinguish between a pre-approval and a pre-qualification. You don't need the latter. It won't do you any good. But the former is a prerequisite, I should think, to making an offer. It will include a credit pull and at least basic verification of employment and assets. You're going to have to do it anyway, so you might as well get started.
- Wayne Barnes, "wbarnestulsa"
- Contributions:53
There are advantages to you in getting pre-approved.
Primarily, with a pre-approval you should receive a "Good Faith Estimate" from the lender. So what good is that? A good faith estimate will tell you exactly what to expect from your loan. The first item is the loan amount. You may want a $200,000 mortgage, but the lender may not approve you for that. You may be approved for a $500,000 mortgage but you may not want to borrow that much. The GFE (Good Faith Estimate) will include the amount of loan you have discussed with the lender, not necessarily the maximum amount for which you would qualify, but for the loan amount with which you and the lender are comfortable. It really is senseless to begin looking for a house until you know exactly how much money has been approved.
An excuse from borrowers on loan defaults is they did not know the terms of the loan. If you are dealing with a legitimate lender, you will know the terms of the loan. The GFE will tell you the length of the loan, usually 15 or 30 year terms. Most mortgages are for 30 years because the longer time frame makes for lower payments.
The GFE will also give you, in precise detail, the interest rate terms for the loan. Except for rare circumstances, the optimum loan is usually for a fixed percentage rate. A fixed percentage rate will not change, even if the loan is sold. There are other types of loans, of course. The other type to mention here is the ARM (Adjustable Rate Mortgage.) These loans can be quite beneficial under certain circumstances because they usually have the lowest interest rate, but the rate can change. The details are in the GFE. One of the occasions this type of loan could be useful is when you know, beyond the shadow of any doubt, that you will only need the loan for a very short amount of time, 2 or 3 years. After that, the rate adjusts and you could find yourself in trouble with the new calculated payment.
Another advantage to pre-approval is you will learn the costs of obtaining your mortgage. The GFE will tell you how much down payment is required for your loan. This amount will vary with the type of loan and other requirements for your situation. There are also other closing costs involved with obtaining the loan. Will the lender be charging an "origination fee?" These costs are detailed in the GFE. Have you enough cash on hand to cover these costs?
The GFE will give you the exact terms of the loan, removing all doubts about the loan, unless you simply choose to ignore the facts, as is the case with most defaults.
So, you really should consider the pre-qualification mandatory for yourself. With the GFE you will know if you really are ready to look for a house. It is extremely disturbing to find the house you love and then learn you can't buy it. Therefore, with pre-qualification you have saved yourself a lot of time and heartache.
You should start your house hunting with a good Realtor. We are a decided benefit to you due to our training and knowledge. A good Realtor will be able to coach you with your loan needs and recommend legitimate lenders. If you don't have a good Realtor, contact me and I will find one in your area through my extensive, world-wide network.
Primarily, with a pre-approval you should receive a "Good Faith Estimate" from the lender. So what good is that? A good faith estimate will tell you exactly what to expect from your loan. The first item is the loan amount. You may want a $200,000 mortgage, but the lender may not approve you for that. You may be approved for a $500,000 mortgage but you may not want to borrow that much. The GFE (Good Faith Estimate) will include the amount of loan you have discussed with the lender, not necessarily the maximum amount for which you would qualify, but for the loan amount with which you and the lender are comfortable. It really is senseless to begin looking for a house until you know exactly how much money has been approved.
An excuse from borrowers on loan defaults is they did not know the terms of the loan. If you are dealing with a legitimate lender, you will know the terms of the loan. The GFE will tell you the length of the loan, usually 15 or 30 year terms. Most mortgages are for 30 years because the longer time frame makes for lower payments.
The GFE will also give you, in precise detail, the interest rate terms for the loan. Except for rare circumstances, the optimum loan is usually for a fixed percentage rate. A fixed percentage rate will not change, even if the loan is sold. There are other types of loans, of course. The other type to mention here is the ARM (Adjustable Rate Mortgage.) These loans can be quite beneficial under certain circumstances because they usually have the lowest interest rate, but the rate can change. The details are in the GFE. One of the occasions this type of loan could be useful is when you know, beyond the shadow of any doubt, that you will only need the loan for a very short amount of time, 2 or 3 years. After that, the rate adjusts and you could find yourself in trouble with the new calculated payment.
Another advantage to pre-approval is you will learn the costs of obtaining your mortgage. The GFE will tell you how much down payment is required for your loan. This amount will vary with the type of loan and other requirements for your situation. There are also other closing costs involved with obtaining the loan. Will the lender be charging an "origination fee?" These costs are detailed in the GFE. Have you enough cash on hand to cover these costs?
The GFE will give you the exact terms of the loan, removing all doubts about the loan, unless you simply choose to ignore the facts, as is the case with most defaults.
So, you really should consider the pre-qualification mandatory for yourself. With the GFE you will know if you really are ready to look for a house. It is extremely disturbing to find the house you love and then learn you can't buy it. Therefore, with pre-qualification you have saved yourself a lot of time and heartache.
You should start your house hunting with a good Realtor. We are a decided benefit to you due to our training and knowledge. A good Realtor will be able to coach you with your loan needs and recommend legitimate lenders. If you don't have a good Realtor, contact me and I will find one in your area through my extensive, world-wide network.
- Naima Sumner, "Dallas Ft. Worth PRO"
- Contributions:2847
If you have already selected the lender you will use, you should get pre-approved. Most lenders pull the credit report and based on the credit score, they issue a pre-qualification letter. A pre-approval is more indepth, such as you have to provide a full loan application, your documents to the lender, pay stubs, bank statements, tax returns etc. then the lender has a better picture and pre-approve you.
It will indeed make you a stronger buyer.
Naima
It will indeed make you a stronger buyer.
Naima
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
You can go beyond a pre-approval to a full approval with property to be determined. That takes about 2 to 3 days with a mortgage banker.
A "normal" pre-approval, is about the same as a pre-qualification. It's just based on your income and debt. You "appear" to be qualified for a loan to x dollar amount. That you can get in a matter of minutes. ... Happy funding, Rudi
A "normal" pre-approval, is about the same as a pre-qualification. It's just based on your income and debt. You "appear" to be qualified for a loan to x dollar amount. That you can get in a matter of minutes. ... Happy funding, Rudi
- xray365
- Contributions:12
Thanks for the detailed inputs. I have some specific queries:
1. Is it possible to get "pre-approved" in 1 week?
2. I have not yet finalized a lender of choice.
3. Also am taking the mortgage within my fiscal means ($300K mortgage; with income $115K and savings of $150K in my bank account). I will probably pay 20% down or more.
Please remember that I am making an offer on a house this week. Should I put that on hold and first focus on getting bids from lenders, finalizing a lender of choice and getting pre-approved first?
1. Is it possible to get "pre-approved" in 1 week?
2. I have not yet finalized a lender of choice.
3. Also am taking the mortgage within my fiscal means ($300K mortgage; with income $115K and savings of $150K in my bank account). I will probably pay 20% down or more.
Please remember that I am making an offer on a house this week. Should I put that on hold and first focus on getting bids from lenders, finalizing a lender of choice and getting pre-approved first?
- Clay Branch, "Georgia Loans"
- Contributions:7838
Call or email Jason, he could probably give you same day approval.
http://www.zillow.com/profile/jasonhphillips.com
http://www.zillow.com/profile/jasonhphillips.com
- wayne lancaster, "funds2"
- Contributions:1177
A pre-approval would typically be required prior to a Realtor recommending a seller seriously consider your offer. It could be provided by a lender with in a few minutes after receiving a loan application, latest paystub, most recent bank statement, and last 2 yrs. of W2s. This could obviously be faxed/emailed back and forth between you and and lender in a few minutes, and lender then would submit for an automated loan approval that would include pulling/viewing your credit report. Automated loan approval takes about 5 minutes. Let me know if you have any questions.
- Al Rodenburg, "Al Rodenburg"
- Contributions:27
A pre-approval shouldn't take longer than 24 hours. For your own peace of mind and that of the realtors working with you, suggest you get one. Your lender should be able to facilitate quickly for you.
Pre-approval necessary?
I understand that pre-qualification strengthens the offer and that I can get pre-qualified quickly. Should I go in for "pre-approval" ? I have heard that this is time consuming. Can I not jump from pre-qualification directly to mortgage approval, especially since I can easily afford the house?
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