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Pre-approved or pre-qualified

Do you already have a pre-approval letter from your lender or pre-qualified on the mortgage loan?  Huh?  This is usually the reaction of my potential buyer clients on my initial phone calls with them.  I can’t blame them as same reaction I had when I bought my first home.  I had no idea what my realtor was talking about.  Due to social media nowadays, a lot of buyers are well informed and sometimes get too much information; the more they get confused. Let’s make it simple by starting with the basic.

You have a good stable job and earning well; took care of your credit for years so most likely you know you can be a good candidate to buy a property.  Before even looking or surfing on the internet; contact a loan officer or go to your bank for a pre-qualification or pre-approval process.  No need to go from pre-qualification if you can go directly to pre-approval process.  The difference:    A pre-qualification is basically an estimate of your ability to borrow money. By supplying a bank or lender with your overall financial standings, they are able to evaluate your finances and give you an idea of the mortgage amount that you may qualify for. This is one of the first steps to becoming more serious about shopping for a home.  This can be done a few minutes over the phone considering all information you provided are accurate and to the best of your knowledge.  In short, the truth and nothing but the truth.  There is no point of hiding anything as truth will comes out based on financial documents you are submitting.

With a pre-approval letter the lender verifies all the financial information by pulling a credit report, went over with your pay checks, bank statements and income tax returns.  You will have to officially apply for a loan so you know exactly how much you can afford.  He writes a letter on your behalf, stating that they’ve reviewed your finances and is willing to loan you a specific amount of money to buy a house when you are ready. It really is best to get preapproved before you go house hunting. It is necessary when you submit an offer and will speed up the process.  Some sellers will not even entertain your offer without a pre-approval letter.  From this process the lender will be able to determine the exact amount for which you are approved for a mortgage. This will give you an even more realistic view of what you can afford.

Some of my clients are reluctant to do the process and would like to do it last.  I told them that it is their best interest to apply for a loan first so we are not both wasting our time.  I don’t want to see them so excited then they cannot get a loan.  Once we are pre-approved for a loan then we can go house hunting.  There are some “myths” or wrong information they get that is why they are so scared to commit or give their information.  If you are really serious in buying a home, you have to trust your Realtor ® and loan officers as they will be your partners during the house hunting.  They have your back.  These are the most common misconceptions of getting pre approval on a mortgage:

“If a loan officer pull my credit then it will affect my credit score” – FALSE the FICO scoring model that lenders use ignores inquiries made in 30 days prior to scoring.  If you are trying to shop for a loan with three different mortgage companies; it is considered as one category as you are not shopping for car on another loan application.

“I don’t want to commit myself on a particular lender, I want to shop around and get the best rate” – of course you can do that.  I always advise my client that as for me; one good thing working with a mortgage broker is they will be the one to shop around for you on the best rates and the best terms.  Through the years, I only work with two honest and trusted loan officers.  I am very comfortable and know that my clients are in good hands.  There are lots out there with maybe better rates but relationship and thinking about my clients’ best interest is always my priority.  Actually there is no commitment to any particular lender unless you actually get the loan from them and sign all the loan documents at closing.

Buying a home versus renting is always a win-win decision and you can’t go wrong especially with the real estate trends right now.  To call it your own, the feeling of a priced possession aside from all other benefits of home ownership.  A lot of people want to buy a home but they can’t due to financial constraints and some unfortunate situations in the past that affect their finances.  If you can, go for it as this is the wisest investment you can get for yourself and at the same time you don’t waste the mortgage payments every month.  The reward is always at the end.

Note:  Jocelyn Porteria is a Realtor® licensed in VA. Top Producer of Fairfax Realty and earning Five-Star Reviews from her clients. She is a Certified Expert Negotiator and also earned a designation as an Accredited Staging Professional; ABR, Accredited Buyer’s Specialist; CDPE Certified Distressed Property and Short Sale Expert, For more info, visit her website at www.jprealdeal.com and on Facebook https://www.facebook.com/realdealconsulting.  Call her at 571-432-8335 or email at realdealconsulting@yahoo.com  for free confidential consultations.

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