The purchase of your home is most likely going to be the largest and most important purchase of your life. Getting out there and looking at real estate might be fun and exciting, but you don’t want to get your heart set on a house only to find out that you won’t be able to qualify for it.
The process of gaining Pre-approval can cut through the mystery and give you an idea of the price range you need to be looking in. It saves time for you, the lender and the seller. Let’s explore what the process involves for each party, Mortgage Company, or Lending Institution. It is advantageous to sit down with your potential lender before you purchase a house and have them analyze your entire financial history and abilities so that they can give you a tentative approval for a certain amount of money. They will present you with a letter that states how much money they are willing to commit to the purchase of a home for sale. In Florida, it is increasingly a requirement to go through this Pre-approval process. Not only will most real estate agents not take you to see homes without it but even if they do and you find a perfect home, most sellers will not entertain an offer without a Pre-approval letter. When you find that perfect home, you don’t want this to be what keeps you from being ready to make an offer. Remember, there are other buyers out there who are looking for the same thing and they do have the Pre-approval letter.
Length of Time for Pre-Approval
Since the potential lender will have to sift through bank records, pay stubs, payment histories and credit scores it could anywhere from a couple of days to a couple of weeks or more. It is worth the time and effort so that you know exactly what you can and cannot afford when it comes to a home for sale. The real estate market is very competitive, so having the advantage of a Pre-approval letter can make all the difference in getting the home you want and need quickly.
Buyer Participation
As a buyer, it is critical that you provide the possible lender with all of the documentation they need to give you a true and accurate assessment of your financial abilities to pay a mortgage. Tax returns, life insurance policies, stocks and bonds and existing real estate that you have successfully paid for in full are all helpful to painting a good financial picture. Pre-approval amounts will be dependent on your ability to pay and the payment history that you have.
You need to make sure that you walk away with a Pre-approval rather than a Pre-qualification letter. A Pre-qualification is simply a quick assessment on your ability to jump into the real estate market. The Pre-approval letter will show exactly what house for sale in the greater Jacksonville area you can actually afford with your current budget.
Importance to Seller
A seller doesn’t want to waste a lot of time showing a home or having to do paperwork that simply falls by the wayside if a potential buyer cannot score a mortgage. Their time is valuable and they need to know that the potential buyers (YOU) are serious and have the income needed to purchase a home. In fact, most sellers in our area won’t even look at an offer unless it is accompanied by a pre-approval letter.
How the Real Estate Agent Can Help?
Once the baseline of Pre-approval is complete, your agent can bring the right buyers and sellers together. The real estate agent can put the right budget with the most affordable properties in that price range. They work much like the conductor of an orchestra. The great thing is that this process of being able to know ahead of time the price range to look in saves time, money and frustration. It is just as unpleasant for the agent to learn that a buyer doesn’t qualify as it is for the potential buyer.
Selling homes is what a real estate agent does for a living. The faster and more accurately they can make the good matches to buyer and seller the more money they make. It is a win-win situation for all involved.
If you are ready to start the process of buying a house, give us a call! We’ll help you through the entire process from Pre-approval to handing you the keys to your new home! 904-582-2769.
