Patty Manzi's Tri-Valley Real Estate Blog

I was asked the other day about why someone would need to get ‘pre-approved’ for a loan before looking for a home.  Here’s why:

If you are serious about buying a home, your next step is to get a ‘pre-approval’ from a reputable Lender.  By doing this before looking at homes, you’ll save yourself time, energy, and frustration. 

The pre-approval will:

• Determine how much home you can afford:  Helps you avoid buying less home than you can afford, or being disappointed if you don’t qualify for as much as you had hoped.
• Shows what your total investment will be: You’ll know approximately how much money you’ll need for your down payment and closing costs.
• Lets you know what your monthly payment will be: You’ll have a very close estimate of what your monthly principal, interest, taxes, and insurance (PITI) will be.
• Identifies the loan programs you can qualify for:  With a wide variety of loan programs available, it is important to know which types you qualify for and which will best suit your needs.
• Strengthens your offer: Sellers may be more inclined to accept realistic offers when they know that you are serious and have taken the time to be interviewed by a lender and are pre-approved for a loan.

When you are pre-approved by a Lender, you’ll receive a Pre-Approval letter to give to your Realtor®.  This letter should state that the Lender has checked your credit, your credit score, verified your income and employment history, and your monthly debts and obligations.

Choosing Your Lender

When you buy a home, one of your primary concerns will be finding a lender who can provide the financing YOU need.  So how should you shop for a Lender?  Most real estate agents have a network of reputable professionals they can refer you to.  Calling around and asking for interest rate quotes is NOT always the best way to select a Lender.

Competitive rates are important, but when you consider the fact that most Lenders get their money from the same sources (and therefore have essentially the same rates to offer), you must look at some other factors before choosing a Lender.  You need a Lender who works with you and your real estate agent as a team and has the same goal – to get your loan approved and closed in a timely and professional manner. 

Meeting With the Lender

When you meet with the Lender you choose, be prepared to provide the following information:

1. Your residence history
2. Your employment history & income
3. All outstanding debts, loans, credit cards
4. All bank accounts – savings, checking, and investment accounts
5. Real estate you currently own
6. Personal property you own

Remember finding a Lender you can trust is just as important as finding an experienced Realtor®.  You want to make sure that your needs are going to be met professionally and represented throughout the entire process of buying your home.  Ask for, and check references.