Preapproval means that a lender has evaluated your
creditworthiness and has made a commitment to extend you a loan up to a
specified amount. There is typically a specified amount of time the preapproval
is valid for. Being preapproved however does not mean that the money will
definitely be given to you when you decide on your property. The lender will
send out an appraiser to make sure you are not overpaying for the property. As long
as the home appraises at or above the purchase price the funds should be
provided.
You
will know exactly how much money you have to purchase with. This keeps you from
wasting your valuable time, energy, and money by not looking at properties that
don’t suit you. This also allows you time to look more in depth at the homes
that are in your price range. As soon as you decide you have found the house,
you can write the offer immediately. The extra time will help you consider your
short and long term plans and choose the right loan for you.
You
will know all of your costs such as title, lender closing cost, and escrow
fees, etc. Upon preapproval you will provided with an itemized list of these
fees. This will also help get a better look at the big picture and make a more
informed decision about homes that need repair or updating.
Avoid
getting disappointed; Finding your dream home and then having a lender tell you
that you can’t get approved can be a very devastating thing for a buyer,
especially a first time home buyer.
Being
preapproved will give you negotiating advantages. Sellers will know that you
are able to perform on your offer it won’t be contingent upon financing. Also
if a seller has a lower offer from a preapproved buyer, and a higher offer from
someone who’s not preapproved, they might be willing to be more flexible with
you and prefer working with you.
If a
property gets multiple offers the prequalified and preapproved buyers will be have
their offers paid more attention to. It gives the owners piece of mind knowing
that you are already working with a lender that is willing to give you “X”
amount of dollars.
Getting
preapproved saves time when you find the home you are looking for. The lender
has to do credit checks, confirm income, and determine borrowing qualifications.
It typically takes 30 to 45 days to close on a house. It can be done faster in
some cases but not often.
Most
agents will be more willing to work with you if you are preapproved. From the
agent’s point of view it’s hard to justify showing homes to someone who isn’t
preapproved because they simply might not be able to get financing at all. Then
it would be a waste of both peoples time to go looking and getting their hopes
up for something that just cannot happen.
Also someone who isn’t willing to talk to a lender before they start
viewing homes shows that they aren’t very serious about buying (Sellers see it
this way also). Another reason is you don’t know how much you can get approved
for, so you don’t know what price range to start looking in. We don’t want to
work for nothing, who would? It’s not because we don’t want to help you, we
just want everything to be done as correctly and efficiently as possible for
everyone.
Being
preapproved right before you begin your home search is typical, but I recommend
starting even earlier. By doing this, the lender will pull your credit and if
there are any mistakes or problems you can take care of them. When you fix your
credit problem your score isn’t affected right away. It generally takes 90 days
to cycle off assuming there are no delays. You can also check all 3 of your
credit scores once a year for free without hurting your credit. I know you can
get this information from www.AnnualCreditReport.com . A higher credit score will allow you
to get a lower interest rate which can save you big money. (I will put together
more information on Credit Scores in a later article)
No comments:
Post a Comment