4 Crucial Reasons to Get a Mortgage Pre Approval

Shopping for a home before getting pre-approved for a mortgage is the equivalent of walking into a grocery store without a wallet. Yet, many homebuyers don’t get a loan pre-approval before the house hunt. So, what is a pre-approval? For one, a pre-approval is different from a pre-qualification. 

Pre-approval: The lender verifies the borrower’s information and documentation to determine exactly how much it would be willing to lend to that borrower.

Pre-qualification: The lender relies on information provided by the buyer to estimate how much the borrower could qualify for.

The documents to get pre-approved are the same documents that you would need to obtain a mortgage.

Documents include:

-Pay stubs.
-Last two years’ W-2s.
-Last two federal tax returns.
-Two months’ worth of bank statements of all types of accounts.
-Your credit report.
-A pre-approval is not a loan commitment, but it helps speed up the underwriting and loan approval process.

Here are three reasons it’s best to get a mortgage pre-approval before you go house hunting.

1. The competitive market
Often buyers are eager to start looking at homes and tend to leave what they view as the boring, bureaucratic part of the home buying process for last.
And yet in this competitive market, any serious buyer should pursue a pre-approval from a lender in advance to beginning a home search.

2. No pre-approval, no accepted offer
Real estate and loan professionals say it’s common to come across buyers who skip the pre-approval process. I see this happen almost daily. I can't hardly believe I still get offers today without a pre-approval, although rarely.

3. You need to know where you stand
Some buyers put off the loan application because they fear a lender may not approve them for the amount they plan to spend to buy the house. It’s similar to when people don’t go to the doctor for their annual checkup when they are afraid to find out what’s wrong with them. That’s the same thing with getting pre-approved. Others simply don’t want to share an abundance of private information with a lender until they actually find the home they want.

4. You may lose "The One"
Often times a buyer finds the "perfect home" before they're approved and misses out on the opportunity to purchase. I have seen this cause grief and mental anguish due to such a large and important purchase. Most likely the largest purchase a person or family will ever make. Another home will show up eventually, it always seems to happen.

You are beyond compare
Even if you pay your bills on time and earn about the same as the friend who just got that $300,000 mortgage, don’t assume you qualify for the same loan. A credit score difference of 700 to 680 can severely affect one’s ability in terms of down payment.

Getting pre-approved before you shop for a loan also allows buyers time to fix unexpected errors on their credit reports.

Looking to Buy, Sell, or Invest? Contact:

David Demangos - Keller Williams Realty
Cell: 858.232.8410 | Realtor® BRE# 01905183
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

San Diego Real Estate Expert | Global Property Specialist
Certified Luxury Marketing Specialist | CLHMS Million Dollar Guild Agent
Green Specialist | Certified International Property Specialist
2016 & 2017 Recognition of Excellence Award Winner SDAR