Getting Pre-Approval from Lenders when Buying a Home

Getting pre-approved for a loan is the first step in the process after our initial meeting, and many times, buyers will speak with one of our recommended lenders over the phone prior to coming in for that initial meeting so that they already know what they can afford comfortably.  This way, they can give us one of the main criteria that we will be gathering right away which is the price point they would like stay within.

The pre-approval process may sound intimidating but its really easy!  It can be done over the phone in as little as 15 minutes or so; or,  if you prefer, you can go in and sit down with the lender in person.  This initial pre-approval is a no-obligation meeting, so this is not necessarily the time that you need to “Shop” for your lender.  All lenders will gather pretty much the same information from you, run that information through an Automated-Underwriting Program and tell you the same purchase price.  Where lenders may differ is on their lender fees (also referred to as closing costs) and on their rates.

You cannot Lock Your Rate until you have a property under contract, which will not come until later, so this is a rather informal estimate given that days rates.  That being said, this will be a valuable relationship that you are starting as this lender can serve as a great source of information while you’re searching for your in running numbers for you on specific properties that you are interested in, keeping you abreast of mortgage rate changes which can happen multiple times per day, and advising you on the different loan products that are available.

At the end of this meeting, the lender will provide you with a pre-approval letter which we will keep in our file so that when we do find a property that you want to make an offer on, we will be able to attach that letter to the contract as all sellers will require this with the offer to prove that you have spoken with a lender and have been pre-approved for a loan.

This is also important because from time to time, buyers are unaware of a blemish on their credit report that they may need to have fixed before being able to buy a home.  Finding these things out up front usually leaves plenty of time for those credit hick-ups to get fixed and a good loan officer will be able to advise you on how to go about getting any surprises taken care of.

On a side note: Having worked in the mortgage business prior to entering Real Estate, I always recommend that you figure out the amount of money that you are comfortable paying on a monthly basis prior to speaking with the lender and then ask them to give you the total purchase price you would qualify for based on that number, given the day’s rates along with the lender’s estimate of taxes, insurance, and closing costs.  I say this because many people are surprised by how high the number is that the lender gives them for a purchase price, but later on in the process, they discover that just because the bank is willing to loan them that amount of money, the monthly payment is higher than they are comfortable with.  After all, at the end of the day, you are really buying a monthly payment as that will be the number you will have to fill in on the check each month and you don’t want to end up living in a beautiful house but not having enough money left over at the end of the month live the rest of your life with!