I speak to a lot of potential home buyers every day.  One question that I get is, why do I need to be preapproved?  This preapproval arms you with a legitimate document, that tells the seller two things.  First, it tells them that you are serious.  Second, it tells the seller that you are qualified to buy the home you are making an offer on.  Very few, if any, sellers will accept an offer without a preapproval letter.  Also, if an agent is driving a potential buyer around without being preapproved first, they are wasting their time, effort, and money. I am amazed when a buyer tells me that they have already been preapproved with another lender, only to find out later that the other lender never even checked their credit.  How can a lender issue a preapproval letter without checking credit?  The answer is you cannot.  If you have been preapproved and have a “letter” in your hands and the lender did not check your credit, income, or assets, you’re only walking around with a piece of paper.  You could be setting yourself up for failure later on down the road.  You found your dream home!  You submit your offer and it is accepted!  You turn in your paperwork to your lender and you don’t qualify.  Wow, what a let down that would be.

 

The preapproval process is something that should be taken very seriously. I imagine that you would rather hear that you will qualify in 60 days, rather than get denied right now.  It is important to work with a lender or loan officer that takes this process seriously.  They will (or should) ask you for the following when preapproving you:

 

1)  30 – 60 days of paystubs

 

2)  2 years of tax returns

 

3)  2 months of bank statements in order to show you have the cash to put down on the home you are buying

 

The loan officer will also ask for your social security number, full name, and current address.  This info will allow them to see if you actually  qualify for the home you would like to buy.  It will also allow them to alert you of any potential red flags.

 

If you are a potential homebuyer, please take the time to do this.  If you are an agent, please make sure that your buyers do this.  Underwriting guidelines are tight.  Let an experienced loan officer

 

An old Social Security card with the "not...

Image via Wikipedia

 

help you and your customers navigate this process.

 

 

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Comments
  1. lclive says:

    Reblogged this on Maui real estate maven and commented:
    It still astounds me how many people shop without knowing what they can truly afford. Real estate is a business, folks, let’s be as efficient as possible and save everyone time!

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