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