Tag: pre approval

Pre-Approval: First Step in Home Buying Process

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In many markets across the country,  the amount of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. Washington DC Metropolitan area is not an exception – the market for desirable properties in Vienna VA, McLean VA, Arlington VA, Alexandria VA and Falls Church VA is very competitive, and often, buyers end up in a bidding war.

If you are competing with other buyers, one way to show that you are serious about buying home is to get a pre-approval letter for a mortgage and include it with the offer. In fact, majority of sellers in Northern Virginia, will not take buyers’ offer seriously if the pre-approval letter is not enclosed in the offer package.

But even if you are in a market that is not as competitive, knowing your budget will give you the confidence to know if your dream home is within your reach.

Also Read:

Mortgage Application Process: Why So Much Paperwork?

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website.

It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.

One of the many advantages of working with a local real estate agent is that many have relationships with lenders who will be able to help you with this process. But it’s always helpful to do your own research and shop around for the lender who would offer the best rates and competitive fees. Once you have selected a lender, you will need to fill out a loan application and provide important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:

  • Capacity: Your current and future ability to make your payments
  • Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
  • Collateral: The home, or type of home, that you would like to purchase
  • Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line:

Don’t overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well. If you are ready to make a move, contact me today to schedule your free no obligation buyer consultation.

To learn more about home buying process, please visit my Real Estate blog page – “Buying A Home”.

And please, don’t forget to download

My Buyers’ Guide:

“Things to Consider When Buying a Home”

As a home buyer, there’s plenty you need to know. You’re about to make the largest financial investment of your life, but with my Home Buyers Guide, you’ll have the information you need about buying a home, right at your fingertips.

Here’s what you will find inside:

  • The Cost of Renting vs Buying
  • 2 Myths That Might be Holding You from Buying
  • Why Pre-Approval Should be Your First Step
  • What You Need to Know About Mortgage Process
  • What to Expect When Home Inspecting
  • And More!

The best part is, our Guide is free and available to download right now. All we need is your name and email, and we’ll send it directly to you.

[red-button url=”https://natashabackupadmin.truedes.com/buying-home-free-home-buyers-guide/”]Download Your Buyer’s Guide HERE[/red-button]

 

Your Step-By-Step Guide to Mortgage Pre-Approval

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If you find yourself sitting in a strange hallway, waiting for a stranger in a suit to size you up and decide if you’re worthy as your palms sweat and your breath gets just a little bit harder to push out, you might be waiting for your appointment for your mortgage pre-approval. You’re one step closer to owning your own home, but this one is a doozy.

Let’s talk mortgage pre-approval step-by-step.

Step One: Mortgage Pre-Qualification Versus Pre-Approval

You probably already have a pre-qualification letter saying that you can probably buy a house in a particular price range, so why isn’t this enough? A lot of home buyers find this part of the process confusing, and frankly, it can be. Your pre-qualification was probably done over the phone or on your first meeting with your lender. They asked you a bunch of questions about your income, your job and maybe even pulled a “soft” credit report to get some idea about your debts.

Based on this information, they gave you the details on the kinds of programs you’re eligible for and how much you can expect in buying power. You probably got a letter that you could show your Realtor to help guide the buying process. The difference between the pre-qualification and the pre-approval is simple: a pre-qualification is based largely on your word. If you give the lender incorrect information, they’ll give you a pre-qualification letter that’s not right.

A pre-approval, on the other hand, takes a harder look at your background, work history and requires a full credit report and FICO score to ensure that you can, in fact, pay back a note.

Step Two: Documentation

Your next meetup with the nice banker is going to be to deliver documents, provide consent to pull a full credit report and, if you’ve already found one, give them the information on the home you’ve put under contract (in some areas your Realtor can do this last bit for you).

Documentation you’ll be asked to bring will include pay stubs, bank statements and tax returns, along with other information that may be needed to verify your income source or sources. Self-employed people, for example, are sometimes required to prepare profit and loss statements (or just pony up more tax returns). If you have assets like a 401(k) or even a CD, you’ll want to bring the details on these, too.

Step Three: The Loan Estimate Form

You’re going to get a copy of something called the Loan Estimate Form, probably at the same meeting where your lender pulls that full credit report and takes all your papers away. This form explains exactly how much they expect you’ll need to bring to closing, along with itemized estimated fees to plan for at closing. If you’re shopping your loan, collect these and compare them side by side before you make your final choice.

But don’t spend too much time crunching the numbers. Just like your contract (and the National Association of Realtors) says, “Time is of the Essence.”

Step Four: Acceptance

Once you’ve had a few minutes to review the paperwork and you’ve made your final pass through the numbers, all that’s left is to call the lender you’ve chosen and let them know you need that pre-approval letter sent over to your Realtor.

Understand that a pre-approval is not a guarantee that you’re going to get the money you need to close. Several things can go wrong along the way through underwriting, including, but not limited to:

– Unverifiable income (this is often due to issues with overtime)
– A change to your credit score.
– An increase in your debt to income ratio
– An undocumented change in employment
– Assets that are unverifiable

The best plan is be totally honest with your lender when you get your pre-approval so that you don’t get a last minute call telling you that your loan has been denied (this actually happens, so pay everything on time and don’t take out new credit lines or add to old ones until you’ve got the keys in your hand).

When is the Best Time to Make an Offer?

Ideally, you should have a pre-approval letter in hand before you so much as set foot into the first house you’re considering for purchase. After all, the seller isn’t going to think you’re all that serious without one, nor will they be keen to want to negotiate under these circumstances.

Help your banker help you get the best deal on the house of your dreams, save everybody a lot of headaches and get that pre-approval first. Knowing how much your closing costs are going to be will also help your Realtor write your contract accordingly if they should need to be wrapped into your mortgage.

Basically, that document is the key to everything. So, no pressure…

Also read: “Pre-Approval: First Step in Home Buying Process” and “Mortgage Application Process: Why So Much Paperwork”.

 

NATASHA LINGLE Realtor in Vienna VA

Navigating the Competitive Real Estate Market: The Importance of Pre-Approval Letter in the Washington DC Metro Area

Posted on by admin

In many markets across the country,  the amount of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. Washington DC Metropolitan area is not an exception – the market for desirable properties in Vienna VA, McLean VA, Arlington VA, Alexandria VA and Falls Church VA is very competitive, and often, buyers end up in a bidding war.

If you are competing with other buyers, one way to show that you are serious about buying home is to get a pre-approval letter for a mortgage and include it with the offer. In fact, majority of sellers in Northern Virginia, will not take buyers’ offer seriously if the pre-approval letter is not enclosed in the offer package.