Pre-Approval – The Myths and The Facts
- Many potential buyers are hesitant to talk to a lender about a pre-approval because they fear an obligation to that lender for a future loan. This is not true. You may use whomever you wish for your loan. A Pre-Approval does NOT obligate you to the lender who provided it.
- The pre-approval process does NOT have a negative effect on your credit score. There are provisions for shopping for home loans, or other loans within credit scoring. A pre-approval or credit check by one or more lenders during a time period should not effect your score.
- A Pre-Approval and a Pre-Qualification are NOT the same thing. A Pre-Qualification is no longer acceptable to sellers. Pre-Qualifications are generally based on a conversation, not documented. You need a documented pre-approval. Those documents may include tax returns, bank statements, a credit report and paystubs which provide the lender with evidence of your income and credit status. Based on those findings, the lender will then match you with lending programs that work for your specific needs and provide a pre-approval letter for your use.
The FACTS – Why Do I Need a Pre-Approval?
- Your Pre-Approval WILL guide you on price and to properties that fit within the parameters of the programs you may use. Your Pre-Approval WILL save you from the disappointment of wasting time and efforts chasing properties you cannot purchase or losing your dream home to another buyer with a Pre-Approval.
- Your Pre-Approval WILL get your offer in front of a seller. In today’s market sellers do not look at offers to purchase without a pre-approval attached.
- Realtors and Brokers have an obligation to sellers to show their homes to qualified buyers. Without your pre-approval, you have no proof you are a qualified buyer.
- Buyers who do not take steps to obtain a pre-approval do not appear to be credible or serious. Realtors and Brokers are not as likely to provide services to persons who are not willing to make equal efforts on their own behalf.
The FACTS – How Do I Get My Pre-Approval?
- Most lenders today have the ability to provide full services to you via email, phone, fax, online, or in person. Just let your lender know how you wish to do business.
- We recommend that you work with a direct endorsement lender who provides funding to close their loans. Direct endorsement lenders underwrite for FHA and VA. More VA information below.
- We believe you will be happier working with a skilled local loan professional. Large online companies may provide the same kind of loans, however a local lender who teams with area Realtors, Title and Escrow companies to reach your goal of home ownership will provide the optimal conditions for a successful closing.
- Chances are your lender will have an easy to use online application form. This is how the lender gathers information to fit you with the lending programs most beneficial to you. To process your pre-approval the lender will need information about your work, wages, taxes and banking and credit history. Other information may be required based on your personal circumstances.
- Many people are anxious about what may be on their credit report. In this business, knowledge is power. Your lender will identify any problems or errors and recommend a remedy. Remember we are all on your team, and our mission is to help you get to your goal.
- Most importantly, choose a loan officer who you feel has your best interest at heart, who is available to speak with you about your personal concerns and has enough experience to solve any problems and bumps in the road that can occur during the loan process.
- Your Realtor or Broker will provide you with one or more loan officer referrals, but will be happy to work with your lender of choice.
The FACTS – VA Loans and Pre-Approvals