The Power of a Home Loan Pre-Approval, Know Before You Go

Power is not a word you typically associate with obtaining financing for a home purchase, but it should be. Your power source: The Home Loan Pre-Approval. 

What in the world is a “Home Loan Pre-Approval”? 

The home loan pre-approval allows you - and the prospective seller - to know you are qualified to finance a certain amount of money. Your home loan pre-approval letter will show that a lender has actually verified your qualifications.

Why is a Home Loan Pre-Approval so Powerful?

In a nutshell, a home loan pre-approval lets home sellers know that you are a serious prospect - as opposed to tire kickers. Your home loan pre-approval letter can be used as a bargaining chip. 

For example, let’s assume you find your dream home next week. The seller has two buyers' offers for their home in front of them.

One (you) is pre-approved with a mortgage and ready to commit. The other potential buyer is just starting the process. Which buyer is the seller more likely to give priority?

Bonus: Another nice benefit of being pre-approved is that you’ll be much less likely to hit unforeseen snags later on down the road. 

How do I get Pre-Approved?

The home loan pre-approval process is quite simple. We will analyze your financial situation and determine how much home you can comfortably finance.

We will discuss your payment comfort level, down payment options, and different homebuyer loan programs to determine a corresponding price point. I’ll also ask you to fill out a short mortgage application and we will run your credit.

Meanwhile, it would be a great idea for you to begin compiling supporting documentation such as: 

1. Recent paycheck stubs
2. Last two years federal tax returns and W2s
3. Last two years business tax returns if applicable
4. 2 months recent Bank and brokerage statements (all pages)

My team processes a home loan pre-approval file just as if you’ve found the home you’d like to purchase. However, for now, we’ll hold off on a few of the processing steps such as the appraisal and title work since a property has yet to be identified.

With a home loan pre-approval letter in hand, you’ll be ready to embark on the journey of finding and negotiating the purchase of your new home. Know Before You Go!