What Is Pre-Approval And Why Is It An Important Place For The Buyer To Begin
August 29th, 2013 categories: BUYERS only, Mortgage Information, Real Estate Forum
Pre-approval allows a lender to get a high level picture of your financial world. The loan application is the starting point. There should NEVER be any cost or obligation to apply with a lender! If a lender is trying to charge you ANYTHING to apply…find another lender!
The loan application covers everything from income to assets as well as past credit history. Loan application allows the lender to pull your credit. Banks today look to meet 3 criteria…
1. Income: is income at a sufficient level to qualify for the loan?
2. Assets: do you have the required assets to purchase a home?
3. Credit: do your scores meet minimum guidelines?
You must meet all 3 in today’s environment to qualify for a loan. The loan application covers all 3 items. The pre-approval makes the presumption that data provided by you is accurate. This means that we presume your income, etc is what you state on the loan application. Typically income and assets are verified AFTER pre-approval as confirmation of the information you supplied on the loan application. If you are self employed OR in sales (commissioned income) the pre-approval may require tax returns up front so that income can be confirmed. This is because often times self employed and sales people take massive tax deductions which effectively lowers their adjusted gross income.
A loan application typically takes 5-10 minutes to complete. Pre-approval typically takes less than 1 business day. More often than not the process can be completed within a few hours. IE if you send in the completed application at noon…we’ll typically have you pre-approved same business day. Once pre-approved lenders will typically ask for you to start sending in data; tax returns, W2, bank statements, etc. A question we often get is: “should we pull my credit now even though I haven’t looked at homes yet?” The answer…YES! You want a lender to look at your credit well in advance of buying.
Credit reports are notorious for having errors on them. If something turns up that you weren’t aware of, now we have plenty of time to correct it. If you wait until you sign a 30 day contract you may be in for some big surprises. Trying to correct credit issues quickly is tough to do especially if you will need a credit re-score. You can also have multiple lenders pull credit within a few weeks of each other. What you DO NOT want to do is apply with different lenders every 30-45 days over the course of 4+ months. That can damage your credit scores potentially.
The bottom line is a pre-approval should be free and with no obligation to the lender. It should also be quick and painless. Pre-approval is important as it will help you understand what you qualify to buy, options that exist, and the terms associated with the payments.
Feel free to contact:
Max A Kallos
Lic. # 170267, NMLS# 156311 404-277-5884 phone
678-298-8947 fax
Contact Max Kallos
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