Do I Really Need A Mortgage Pre-Approval To Make An Offer On A House?

By
Real Estate Agent with Coldwell Banker Realty

 

Do I REALLY NEED A Mortgage Pre-Approval To Make An Offer On A Home?

A mortgage pre-approval is the first step in your journey to purchasing a home, giving you a competitive edge when you make an offer on a house. Being intentional and competitive are musts when buying a home.  That's why pre-approval is so important today. Pre-approval from a lender is the only way to know your true price range and how much money you can borrow for your loan.    

 

Why Does A Mortgage Pre-approval Matter So Much Today?

 

Today, there are many more buyers looking for homes today than there are homes available for sale. That's creating some serious competition. According to the National Association of Realtors (NAR), the average home is getting 4.8 offers per sale. As a result, bidding wars are still common. A mortgage pre-approval gives you a leg up in these situations. That's because you know exactly what you're approved to borrow before you write your offer.

 

And it lets the seller know you're fully qualified to buy their home. This helps both you and the seller feel confident in what you're bringing to the table. That puts you in a better position to potentially win a bidding war. Most home sellers won't give any consideration to an offer without an accompanying mortgage pre-approval.    

 

VIDEO: Why A Pre-Approval Is Key

 

 

Every advantage you can gain as a home buyer is crucial in a highly competitive market that's constantly and quickly changing. Mortgage rates are rising, home prices are going up, lending institutions are regularly updating (and often tightening) their lending standards. You'll need guidance to navigate these waters. So it's important to have a team of professionals, such as a loan officer and a trusted real estate advisor, on your side. They'll help make sure you're ready to put your best foot forward.  

 

WHY PRE-APPROVAL IS AN IMPORTANT STEP FOR TODAY'S HOME BUYERS

 

THE POWER OF A MORTGAGE PRE-APPROVAL: INFOGRAPHIC

Why You Need A Mortgage Pre-Approval    

 

Why You Need A Mortgage Pre-Approval & Not Just a Mortgage Pre-Qualification

 

A mortgage pre-approval is not the same as a mortgage pre-qualification. A  mortgage pre-qualification estimates how much you might be able to borrow. It's based on a mostly informal evaluation of your finances. Often no credit check is done for a pre-qualification. That's all a pre-qualification basically is... an estimate of what you might be able to borrow.  

 

A mortgage pre-approval takes the loan approval process one step further with the lender verifying your credit and financial information before giving you a detailed analysis of how much you would be approved to borrow. There are also lenders who will pass on your verified credit and financial information to their underwriter for a review. Based on the underwriter's review, the lender will issue a conditional approval to lend up to a specific amount, contingent on a contract, appraisal, and no changes to your financial status.    

 

Documents You Will Need For A Mortgage Pre-Approval

1. Valid Form of Personal Identification

Valid forms of personal identification can include a state-issued driver’s license or ID card with photo, passport or U.S. alien registration card.
 
2. Social Security Card/Number
 
3. Pay Stubs Or Electronic Copies Of Pay

If you have any other sources of income, such as child support or alimony, you will need to disclose those and provide a paper trail of same. If you’re self-employed or own a business, you’ll need to provide your tax returns and business returns and profit and loss statements for the past 2– 3 years. You’ll also need to provide your year-to-date audited Profit and Loss statement.
 
4. Bank Statements For Past 3 Months
 
5. Tax Documents

Including two most recent W-2 forms and last two years of tax returns.

6. Investment/Savings Account Statements 7. List Of Monthly Debts For example:
  • Rent or mortgage
  • Car loans
  • Student loans
  • Credit cards
  • Personal loans
  • Home insurance
  • Homeowners association fees
  • Medical bills
When providing your list of debts, include your creditor’s name and contact information, your total balance due and the required minimum monthly payment.
 
8. Rental Information And Landlord Reference

If you’re a renter, you’ll likely be required to show that you’ve made on-time rent payments. Typically a lender will look for a two year history of rent.
 
9. Credit Report

Your lender will pull the credit report once they have your permission to do so.
 
 

This information about why a mortgage pre-approval should be your first step in you home buying journey is provided   by  Nina Hollander and Carolinas Realty Partners with Coldwell Banker Realty, Greater Charlotte area residential real estate experts serving Charlotte area home buyers and sellers for 20+ years. If you need an introduction to some of Charlotte area's top mortgage lenders to get pre-approved, contact us today. We're never more than a call, text, or email away! We'll have you on the path to homeownership in no time!

 

If you're considering purchasing (or selling) a home in the Charlotte region, I'd love an opportunity to earn your business, to exceed your expectations, and to show you why experience matters and how:

 "The Right Broker Makes All The Difference."

 

Read the original at www.GreatHomesInCharlotte.com

Posted by

 

 Nina Hollander, RE/MAX Broker, Realtor

 

 

 

Broker, Realtor, MBA, GRI, ABR, SRES, CDPE, SFR, SPS, CMRS
Carolinas Realty Partners with Coldwell Banker Realty
Direct: 704-779-0813
Website: www.GreatHomesInCharlotte.com
Blog: News You Can Use From The Greater Charlotte Area
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Disclaimer:  Nothing in this blog article is to be construed as legal advice, tax advice, or financial advice.  For legal advice see an attorney.   For tax advice or financial advice see a tax attorney, certified public accountant, or other qualified professional.

 

Comments (34)

Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Joan Cox hi Joan... and yet, I get offers on my listings without a real pre-approval or POF; I speak with prospective buyers who think they can wait until they find "the" home.

May 17, 2022 09:12 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Sheri Sperry - MCNE® that's a new one on me, Sheri... taking on only cash clients. I'd be out of business quickly in my market if I did that! :) In NYC I sold lots of coops in all-cash buildings, so that was the first step for me... validating my clients' financial position to ensure sufficient liquidity to purchase plus usually 2 to 3 times the purchase price in liquid assets.

May 17, 2022 09:14 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Jeffrey DiMuria 321.223.6253 Waves Realty hi Jeff... is there a real estate agent out there who has been in this business for a while who hasn't heard this? 

May 17, 2022 09:15 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Joe Jackson thank you, Joe... appreciate the nice comment and your stopping by today.

May 17, 2022 09:16 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Patricia Feager, MBA, CRS, GRI,MRP hi Patricia... thank you so much for that nice comment... of course, I don't go into any activity looking to rattle anyone's bones. :)

May 17, 2022 09:16 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Paul S. Henderson, REALTOR®, CRS hi Paul... I have given up trying to figure out what some people are thinking. It gives me a headache!

May 17, 2022 09:17 AM
Nick T Pappas
Assoc. Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, Broker/Providence Property Mgmnt, LLC Huntsville AL - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

Hello Nina...I'm still a little surprised to see that even some agents use the terms pre-approval and pre-qualified interchangeably. They are definitely not the same!

May 17, 2022 10:14 AM
Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400
The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY
Long Island Condo and Home Specialists

Our Broker's new Standard Operating Procedures rule now is that we must get a pre-approval before making an offer on a property. Last week it was before we can work with a buyer, but it was just changed.

May 17, 2022 10:22 AM
Kathy Streib
Cypress, TX
Retired Home Stager/Redesign

Niyna- you've spelled it out well for about-to-be buyers.  For someone who hasn't purchased a home in many many years or who is a first-time buyer, they may not be aware of this. 

May 17, 2022 10:31 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Nick T Pappas hi Nick... you are right about that. I'm always getting pre-quals with offers for listings and agents present them like pre-approvals.

May 17, 2022 11:45 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400 hi Sheila... that is something our brokerage might recommend, but it would be impossible to enforce as we are all independent contractors and brokers in our own rights.

May 17, 2022 11:47 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Kathy Streib hi Kathy... we are in such a different market now and buyers need to have every advantage they can garner in advance of making offers on any home.

May 17, 2022 11:49 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Nina every Realtor I partner with insists on at least a pre-qualification letter before they will show anyone a house.

May 17, 2022 01:57 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Nina:

Great education on the importance, and value, of getting a pre-approval and what it entails. It's especially important these days given the competition and how quickly things move. Some buyers need more education on this! 

Jeff

May 17, 2022 02:25 PM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

George Souto good morning, George... pre-qualification letters are something I "abandoned" more years ago than I can count. I often say they are worth maybe the paper they are printed on.

May 18, 2022 04:28 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Jeff Dowler, CRS thanks, Jeff... I've considered pre-approvals critical to making a good offer and getting it accepted long before we entered this insane market a couple of years ago. But they are more important now than ever. And I still come across quite a few agents and buyers who don't understand the difference between a pre-qual and a pre-approval.

May 18, 2022 04:30 AM
Leanne Smith
Dirt Road Real Estate - Golden Valley, AZ
Relocation to NW AZ with elbow room & more freedom

The AZ AAR Contract does require the AAR PreQual Form to be submitted at the time the offer is made for purchase if a loan is involved. Within the contract there is additional information regarding the type of loan, etc. All must be complete for the contract to be considered a valid and complete offer.

May 18, 2022 05:43 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Leanne Smith that's interesting, Leanne. North Carolina contracts are not contingent on financing, so buyers better have it ready to go before their due diligence date expires. Our contract has space to let seller know how buyer intends to pay for the home, but no requirements to provide any documentation. That being said, no agent worth his or her salt would submit an offer without POF or a solid pre-approval if they want their offer to be considered.

May 18, 2022 05:56 AM
Leanne Smith

Being relatively new to the AZ real estate industry, I have been told more states are looking to AZ. The somewhat shady past AZ had with land fraud to other related real estate issues has resulted in AZ raising the bar to avoid these past issues.

May 18, 2022 06:12 AM
Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

This is an excellent post with great information. Thanks for sharing it.

Have a super fantastic week!
Joe Jackson, Realtor-KWCP

May 23, 2022 06:43 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Joe Jackson thank you, Joe... and I wish you a super fantastic week, as well, and then some! :)))

May 23, 2022 12:32 PM