Mortgage Pre Approval Why Is It So Important

Dated: 02/09/2014

Views: 7434

Need a mortgage to buy a home any time soon? Save yourself and your agent some time by going through the mortgage process before starting your home search. Here's why: calling a mortgage broker or bank shows your "seriously" looking to make a purchase to the seller. If you find a home and want to place a bid and then tell them I still need to call for a pre approval the seller will think you are a tire kicker and wasting their time! No one wants to start any negotiations on the wrong foot.

So, what's the difference between getting pre approved and pre qualified and which document will give you the most leverage when placing a bid? For starters let's establish the difference between the two: a pre approval is a document issued by a mortgage company or bank stating they spoke to you and you "verbally gave them your income, debts, and they pulled your credit to determine your buying power" ... now after you find a home in the  affordable range that was discussed with your banker or mortgage broker you can place a bid once you find a home. Now the seller still realizes, if they have a good listing agent that this is still all verbal and needs to have all the necessary documentation sent into the banker or mortgage broker and verified by an underwriter.
This leads me into a pre qualification letter vs. the pre approval letter. If you decide you like the banker or mortgage broker that you are working with then by all means send in the balance of the documentation that they need to fully pre qualify your loan. What does this do for a potential buyer? Well, for the buyer it will streamline the necessary documentation needed to close on the new loan. Why? Because the banker or mortgage broker has been reviewed by an underwriter and proofed out all information that was supplied by the buyer is true and correct and the bank or mortgage broker is satisfied the buyer is ready, willing and able to repay a loan that would be offered and has met all guidelines for the type of mortgage needed. Please be aware the pre approval and the pre qualification is time sensitive. What does that mean? It means your approval and/or qualification is good for a certain period of time and the bank or mortgage broker will tell you how long the document is in force.
Moral of the lending saga is, if you are really ready to pursue a home search and want the process to go smoothly not only for yourself, but for the seller as well; be prepared. No one likes having their time wasted! Don't take that personally, it's just a matter of business and showing each other the respect of the negotiation. Be frank with a seller; tell them what your timeframe is for moving and if that is something they can not accomadate and it will affect your mortgage rate  and closing costs once locked in; then possibly this is not the house for you. See, no time of yours or theirs gets  wasted! Believe me when I say this saves so much heart ache on both sides of the transaction. It hurts much more to find a home and realize you need financing and because of the logistics involved you just didn't do enough up front to see any of this coming and now you cannot buy the house of your dreams, it's a great let down. Buying and selling homes is emotional, don't let it get the best of you. Educate yourself so the process is a good experience!
I'll have more next week on the art of making an offer with the thought of financing needed and how this effects the appraisal. Another aspect of the lending process that can definitely change the outcome of a transaction if not planned properly. This is where a very experienced agent can certainly guide you through the buying process.
I hope this helps out to prepare for a great buying experience in your future and if you need a confident and caring agent with over 20 years of working with buyers and sellers call Pamela "Pam" Camiscioni at The Van Dyk Group located at 500 Barnegat Blvd., Suite 300 Barnegat, NJ 08005. My direct number is 609-433-0418 or e mail me at pcamiscioni@vandykgroup.com
Check out this beautiful home in a 55+ community located in Sea Oaks in Little Egg Harbor, NJ


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Pamela Camiscioni

Pam’s a residential agent for over 20 years servicing clients from first timers to retirees covering all aspects of the residential real estate spectrum from listing your home to finalizing your new....

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