Now that you have a Realtor, you’ve taken a big step forward in the home buying process. There is another essential relationship you need to establish before you can make an offer on any property. Next, choose a mortgage lender. That individual will get you preapproved to buy a home.
What is a Preapproval?
In mortgage preapproval, you provide a qualified mortgage lender with crucial financial information. The lender then verifies details related to your finances. The desired outcome of this process is that you receive a “Preapproval Letter” which your lender will also send to your Realtor. This letter is attached to any offer we write for a property. In the current market, a preapproval letter is an expectation, not a luxury. Your offer will not receive due consideration without this letter so you may lose a property you love if a competing buyer comes more prepared than you.
Who Should I Work With to Get Preapproved?
We will gladly provide you with names and contact info for several mortgage lenders we trust. The characteristics of a good lender are that he or she is honest, responsive, and devoted to excellent quality service. We expect lenders to tell you the truth about what you can and cannot afford, what your monthly payments and closing costs will be, and how long it will take to get your loan approved. These are essential pieces of information for you. We also expect them to return your calls- as well as ours- promptly. Your home bank may be a resource for a mortgage loan, but it still may be worthwhile for you to interview at least one mortgage lender separate from a bank. They are often faster and may have more creative options and plans than some traditional banks.
How Much Does Getting Preapproved Cost?
Typically there is no charge associated with getting a preapproval. Your loan officer gets paid after closing by the mortgage company. There is no direct charge to you for the services provided by a mortgage officer.
I got Prequalified Online Instead – is that OK?
Do not mistake “prequalification” with”preapproval.” Some will tell you they mean the same thing, but Seller’s agents often view them differently and that’s what really matters. Prequalification letters are often provided by online sources and the lender often hasn’t verified the financial data which is why they aren’t as valued. A prequalified Buyer is therefore riskier for the Seller so most will choose a Buyer who is preapproved over one who is prequalified.
Even a Preapproval letter doesn’t insure that the transaction can get to closing. Final underwriting is a more lengthy and thorough process that happens after your offer is accepted but preapproval by a good lender makes it more likely that the Buyer will get final loan approval.
Questions? Please get in touch and we can talk more about this or I can provide you with my list of trusted lenders who would welcome a chance to work with you.