Get Pre-Approval for a Loan Before Starting Your Home Hunt
I am currently buying my first home, and one of the most confusing (and frustrating) aspects of my first home purchase was the mortgage pre-approval letter. At what point in the process did I need to receive a pre-approval letter? Can I look for mortgage rates first? How much paperwork do I need to provide before the bank pre-approves me for a mortgage?
In the end, my pre-approval process turned out to be pretty straightforward. I wanted to propose at home, my agent told me I needed to have a pre-approval letter before I could propose, I went to my local bank and did it in half a day.
Yes, it helped that the freelancer was flexible; having a local bank nearby from where I could call and visit the person in charge of the pre-approval process definitely helped; Keeping tax returns for years on my laptop and ready to be emailed to a bank representative was a huge benefit.
But did you know that in general it would be smarter? Received preliminary approval even before starting to inspect houses . That way, I wouldn’t have to rush through the process for fear that someone else would propose the house I wanted before I had a chance to get it done.
Money.com offers another reason why you might want to get a pre-approval letter before you start looking for housing: in a COVID-19 environment where agents and sellers want to reach as few people as possible with your pre-approval letter- Confirmation, ready to ship, shows that you are serious about the process – and that could be your ticket to the homes you want to tour.
“A pre-approval letter has long been the preferred requirement for agents when submitting a proposal, but having a pre-approval letter before inspecting homes in a COVID-19 environment is an absolute must,” said Kara Amir, a real estate specialist. Agent Coldwell Banker Vanguard Realty in Ponte Vedra Beach, Florida. “Sellers and listing agents are wary of who enters their homes and they want to make sure that only those who are truly qualified enter their doors.”
My pre-approval letter process took a good three hours, including a multi-page online application that required me to provide the monetary value of every bank account, investment account, and asset I owned. Taking your time with the process and getting my paperwork in order before I even started looking around the houses would be much less stressful, especially since the document the bank gave me at the end of the process was not technically a pre-approval letter; it was a pre-qualification letter one notch below pre-approval.
(Basically, given our limited time and my desire to receive this offer as quickly as possible, the bank was only able to state that I was prequalified for the mortgage that I requested, not that I was pre-approved, which was another huge one. a source of concern, as someone with both an offer and a pre-approval letter may have a better chance of accepting their offer.)
In the end, I never got that first home – although it had nothing to do with pre-approval or pre-qualification letters. Someone else had a conditional offer for the property, and after we submitted our offer, the conditional buyer decided to proceed with the purchase. I got a second home that we proposed to, and now all I have to worry about is closing it.