Getting preapproved can offer significant advantages to a homebuyer. Not only does it help you understand what you can afford, it also lets sellers know you are a serious homebuyer who is prepared to make an offer when the opportunity is right.
• A preapproval gives you a better understanding of how much house you can afford. This can help you avoid the heartache of making an offer on a house, only to discover that you don’t qualify for the loan amount you need.
• For a full preapproval, you will usually need to supply the same financial documents you would if you were applying for a mortgage, including: income statements, bank statements, recent tax returns, etc.
• Make sure you have an understanding of your current credit standing. It is a good idea to be familiar with your credit score, as well as the amount of your outstanding debts and how that compares to your total assets.
• Preapprovals are not required by most sellers, but it is a good idea to obtain a preapproval letter to show that you are a well-prepared, motivated buyer.
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Felicia: The preapproval process is a huge benefit, primarily because it lets you know up front what you qualify for, so you don’t have to spin your wheels looking at properties that you can’t afford.
Tanin / Jaclyn: Preapproval is peace of mind. It’s huge to know, I mean you have a document in writing that says… ok this is all real. We can look at a house and make and offer and maybe end up in this thing.
Felicia: Typically they need pay stubs, bank statements, as well as the last two years of their tax return.
Tanin / Jaclyn: Your income statements, all sorts of bank statements, rent checks… anything that’s an official document with your name on it, at some point comes into play.
Michael: The first thing you’ll want to do is actually meet with your mortgage banker. And we sit down and we look at your income, we look at your assets, if you’re receiving down payment assistance from a family member, whether it’s a loan or a gift. We’d want to look at your rental history, cause that kind of gives us an indicator of what would happen, ya know once you do have a mortgage.
Tanin / Jaclyn: We started talking to lenders and it all happened really fast. From that first conversation within 10 minutes, they were sayin, just start preparing all the… ya know, make sure your bank stuff’s in order. And one of the first things’ they said was we need to run a credit check.
Ben: The biggest component in what we do is credit. So definitely have an understanding of how your credit is, how it works, what’s on your credit report, what your liabilities are.
Michael: Before being approved, we would want to make sure that that profile is in order, that you don’t have a lot of outstanding debt, whether its student loans, or credit cards, car loans, etc.
Ben: Not everyone has to go through a preapproval process, but we definitely recommend it. The way the market is today, it’s very competitive.
Michael: When a client goes through the preapproval process that kind of puts their offer at the top of the market.
Tanin / Jaclyn: Being preapproved is also a qualifier for you to be a serious buyer. Everyone talks about the preapproval letter, from the second you walk in a look at a place, most agents ask if you’re preapproved. Once we were preapproved, we realized we’re in the game now.