Buying a house? You'll need a Pre-Approval

[pianoman9701]

Make sure if you're house hunting, you get pre-approved for the maximum amount of money you can spend on a house. So what is being pre-approved and being pre-qualified? Pre-qualified is that you tell me your information regarding debts and liabilities, income, and I give you rough numbers on what you should be able to qualify for on a purchase. However, pre-approval is different. I collect your last two paystubs and confirm 2 years steady employment, two months of bank statements, 2 years taxes, present mortgage statement and note if applicable, and all assets and liabilities (including child support and alimony), and get your personal information. Then I run a credit report. Once I have everything, I'll write a letter about how big a loan you're currently approved for based on your current DTI (debt to income ratio), and the amount, if any, that you're able to put down on the purchase. You'll then be able to use that letter with the sellers and their agents to secure a property, along with your earnest money.

Getting pre-approved isn't really too difficult. But in this housing market, it's essential you have your ducks lined up prior to searching or you may miss the dream home you've wanted.

Give me a call or send a PM if you need more information or have questions.
John Wallace
360-771-1914

[Colville]

Two homes in my hood had "sold" added to their signs before the cement was dry on the post.  Pre approved is the bare minimum to having a shot right now!  One of those listed at 899k the other 625k.

Crazy crap I'm seeing too with no inspections etc.  If you have any pull with agents, recommend the go to a pass or fail inspection.  Keep hearing of and saw claims where the buyer wants to fix damage discovered.... after moving in!  Crazy days in real estate.  Best of luck to you Pianoman!!

[pianoman9701]

Two homes in my hood had "sold" added to their signs before the cement was dry on the post.  Pre approved is the bare minimum to having a shot right now!  One of those listed at 899k the other 625k.

Crazy crap I'm seeing too with no inspections etc.  If you have any pull with agents, recommend the go to a pass or fail inspection.  Keep hearing of and saw claims where the buyer wants to fix damage discovered.... after moving in!  Crazy days in real estate.  Best of luck to you Pianoman!!

I'm having the time of my life. Happy customers and just had the biggest month of my working life. I'm very thankful. 

[pianoman9701]

Two homes in my hood had "sold" added to their signs before the cement was dry on the post.  Pre approved is the bare minimum to having a shot right now!  One of those listed at 899k the other 625k.

Crazy crap I'm seeing too with no inspections etc.  If you have any pull with agents, recommend the go to a pass or fail inspection.  Keep hearing of and saw claims where the buyer wants to fix damage discovered.... after moving in!  Crazy days in real estate.  Best of luck to you Pianoman!!

I saved $450 on not getting the home inspection. Of course, now I'm spending $15,000 on needed repairs...

[jjhunter]

I never put much faith in a pre-approval letter.  I’ve had personal deals fall through at underwriting when buyers were “pre-approved”.   Cash is the only language I speak.  I even put a mandatory lease back provision in my last deal so I had the cash 45 days before I had to move.   

[jay.sharkbait]

We’ll only sell on a cash deal.

[pianoman9701]

I never put much faith in a pre-approval letter.  I’ve had personal deals fall through at underwriting when buyers were “pre-approved”.   Cash is the only language I speak.  I even put a mandatory lease back provision in my last deal so I had the cash 45 days before I had to move.

It sounds like someone didn't do the legwork. I'm sorry to hear that. If you can pay cash for a home, all power to you. 

[brew]

I never put much faith in a pre-approval letter.  I’ve had personal deals fall through at underwriting when buyers were “pre-approved”.   Cash is the only language I speak.  I even put a mandatory lease back provision in my last deal so I had the cash 45 days before I had to move.

honestly in this market i wouldn't be concerned if i were selling my house on a "pre approval" deal and it fell through. me the seller wouldn't be out any money (doesn't the buyer have to put down a little cash in the event the deal falls through ?).  even if they only put down a couple thousand $$ according to my projections my house is gaining around 20k value every month so if the deal falls through after 10 days i would actually be losing around 10 grand if i sold at the original price rather than re-listing ?  My realtor who we worked with buying the property we have and had our house built is emailing us monthly asking if we are interested in selling.  Last house she sold had 25+ offers on it the first day it hit the market

[jjhunter]

The problem is, it doesn’t go to underwriting until right before the closing date, so you could be out of your home and off to the next when the deal falls through.

[fly-by]

I never put much faith in a pre-approval letter.  I’ve had personal deals fall through at underwriting when buyers were “pre-approved”.   Cash is the only language I speak.  I even put a mandatory lease back provision in my last deal so I had the cash 45 days before I had to move.

honestly in this market i wouldn't be concerned if i were selling my house on a "pre approval" deal and it fell through. me the seller wouldn't be out any money (doesn't the buyer have to put down a little cash in the event the deal falls through ?).  even if they only put down a couple thousand $$ according to my projections my house is gaining around 20k value every month so if the deal falls through after 10 days i would actually be losing around 10 grand if i sold at the original price rather than re-listing ?  My realtor who we worked with buying the property we have and had our house built is emailing us monthly asking if we are interested in selling.  Last house she sold had 25+ offers on it the first day it hit the market

That logic holds up in a perpetually rising market. However in a typical market with ups and  downs the seller is giving away a free option to the buyer. Market up, buyer closes. Market down, buyer walks.

A house is just a financial asset you happen to be able to live in, but the principles are the same as a share of stock.

[pianoman9701]

The problem is, it doesn’t go to underwriting until right before the closing date, so you could be out of your home and off to the next when the deal falls through.

Actually not true. A pre-approval with us goes through AUS (Automatic Underwriting System) before we write the letter. Unless something changes in your credit profile between the time you get the letter and the time you close, nothing should change. The most common problem is people applying for other credit like a new toy, a credit limit increase, etc. Another is people hiding liabilities that don't immediately show up on the credit reports. If you don't tell the truth on a loan application, you'll have problems closing.

[Buckhunter24]

We just bought and were offered 2 options, pre approval where we get all our documents in ahead of time and pre qualified where we needed to just provide a few financial documents. We got pre approved and there's no way we would have been the winning bid if we hadn't. Also we bought with no inspection, I suspect we would not have been the winning bid if we had not offered that as well.

[pianoman9701]

The only other instance I can think of where a pre-approval isn't going to be accurate is if the lender changes their overlays. An overlay is a lender's requirement for a specific loan. For example: A lender may require a median FICO score of 620 for FHA loans. If they're experiencing larger than usual losses on FHA loans, they could raise that to 640. But normally, if the broker (me) does his job correctly, a pre-approval will lead to an approved loan in lieu of changes to overlays and the above document and credit requirements. The most frequent reason for approval NOT leading to an approved loan is changes to the borrower's credit.