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The benefits of being Pre-Approved before buying a home in Portland Oregon.

By
Real Estate Agent with Oregon First

 

The benefits of Being Pre-Approved before buying a home in Portland Oregon. loan application

By Wayne B. Pruner

http://www.yourhomeinportlandoregon.com/

Wayne's Portland Oregon area Real Estate blog

www.activerain.com/waynepruner

Most home-buyers have an idea of how much they can afford, but don't realize the value of being pre-approved before seriously shopping for a home. Meeting with a loan officer and subjecting yourself to financial scrutiny is a painful experience. There is always the element of uncertainty and the paperwork can be daunting. Consider this: You are going to have to apply for a loan eventually. It is always better to establish, with confidence, a price range of homes to consider early in the process. With all the loan programs available today, it has never been easier to qualify to buy a home. The idea is to find the mortgage, the one with the lowest costs and the best terms, that is right for you.

Here is the reasoning behind this advice:

  1. A pre-approval letter is more reliable than being "pre-qualified". Getting pre-qualified is easy. You just call a mortgage broker or lender, provide some basic financial information, and very shortly they will tell you how much you can borrow. This is non-binding on them and is generally not a true reflection of your borrowing power. A pre-approval letter requires verification of information. Rather than taking your word on faith, the lender requires documentation of the aspects of your financial situation. Verification is needed of such things as; employment history, source of down payment and the amount of debts you have. You will know what loan program works best in your situation. The extra due diligence is exactly why the pre-approval carries more weight.
  2. A pre-approval letter establishes your buying power. You will know with certainty how much money you qualify to borrow. Most home buyers have an idea of how much they can afford, but don't realize that other factors, such as, the amount of down payment, mortgage insurance, interest rates and property taxes, affect your borrowing power. You may not be able to borrow as much as you think you can. This depends on your income, debts, and credit history
  3. Pre-approval saves time. You can spend more time looking for a home and less time worrying about financing. A head start in processing can eliminate surprises and speed up acquiring your home. Applying for financing is easy and fast. Ask me how. I can guide you through the entire process and reduce your stress. Based on my experience, I can suggest lenders that have a history of offering competitive programs and delivering promised rates and terms.
  4. Pre-approval increases your negotiating power. A pre-approved purchaser is of great value to the seller. Sellers prefer to negotiate with pre-approved buyers because the sellers know that such buyers are qualified to obtain financing to complete the transaction. A pre-approval letter is especially favorable to a seller in a multiple offer situation. Additionally, with a pre-approval letter in your hand, you can feel more confident when you make an offer that you will be able to obtain a mortgage.
  5. Your real estate agent will work harder on your behalf. A pre-approval letter signals to your agent that you are a well qualified buyer who is serious about acquiring a home. The increased likelihood of a closed sale, and a commission, will naturally motive your agent to devote more time and energy to you. In fact, some agents won't even show property to buyers who aren't pre-approved. The seller, not the buyer, upon the successful completion of a sale, pays your agent. Your agent works for you and it costs you no money.

How reliable are pre-approval letters? Pre-approval letters are not binding on the lenders and are not loan commitments. It is still necessary to check such items as appraisals and your latest credit report just before closing. In addition they are time sensitive. If your financial situation changes, interest rates rise, or a specific expiration date passes, the lender will review your situation and recalculate your maximum mortgage rate accordingly. Despite these caveats, pre-approval provides a reasoned, careful analysis of what you can afford. It is in no ones best interest to suggest high loan limits that later can't be delivered.

Wayne B. Pruner is a Realtor® in the Portland, Oregon area. He is ready to help you with all your real estate needs. His phone number is, 503-891-0795.

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I can save you money on buying, selling, and owning a home in Tigard Oregon.

Tigard real estate agent

Wayne B. Pruner, GRI, Realtor, Principal Real Estate Broker - Oregon First

Mobile phone: 503-891-0795

email:  waynepruner@oregonfirst.com

website: Tigard Oregon Homes

Licensed in the State of Oregon

Dave Cheatham
INC Financial - Bartlett, IL
more and more people should be doing this.  I was with a group of Realtors and heard a guy tell them this should be done before you even take a client out to see homes.  How true.  I know the numbers might say they can afford a home, but their Fico might say otherwise.
Apr 23, 2007 08:27 AM
Larry H Morris
Mortgage Solutions Financial - Portland, OR
Larry Morris, NMLS 150073

Good post Wayne. My advise is to take it a step further. In this day and age it takes very little time to get an actual credit approval with all conditions signed off that actually is binding on the lender. Most lenders do want an address, but I have 1 that will allow it on a property to be determined. This puts the Realtor and buyer in a superior position of strength.

I've actually sat down with a sellers agent and went over the Conditional Approval from the lender line by line and showed them that everything relating to the borrower was cleared. This sealed the deal and my borrower got into the home of their dreams.

Apr 24, 2007 05:19 AM
Stacy and Jackie Jones
The Jones Team - Katy, TX
Houston/Katy Realtors
Good post.  It's important for the client to know what they can afford.  We don't want to show someone something they can't really buy.  Buyer's tend to shy away from the mortgage peopkle at first, but when we explain it to them in that way they come around.
Jun 26, 2007 09:36 AM