Homebuyers: Here are the first two (and most important) steps to make

Posted on July 1, 2018MLIVE

When you’re ready to dive headfirst into the homebuying market, there are two critical steps to take:

  • Find a Realtor® you can trust
  • Get preapproved by a mortgage lender

A Realtor® will help you identify the type of home you desire, where available homes that fit your preferences are located and use up-to-the-minute data that will assess the value of houses that interest you.

The guidance and expertise are invaluable as you make one of the biggest and most important decisions of your life. Your Realtor® will be by your side and act as your biggest advocate from the beginning of your search to the evaluation of whether homes are right for you and advising on how to write an offer.

But before any of that can happen, it’s vitally important to have your finances in order to make sure that you land the house of your dreams.

Your Realtor® should advise you to get preapproved by a mortgage lender of your choice, and based on prior experience, the trusted agent can make financing suggestions from GRAR affiliates with whom they’ve worked in the past.

While any bank or broker can potentially provide the note for your purchase, GRAR affiliates have a track record of success that include a smooth workflow and a personal touch at completing a purchase.

Obtaining a pre-approval proves to sellers that you’re not window-shopping and adds weight to your ability to buy a home when you make an offer.

Why is a pre-approval important compared to being pre-qualified?

A mortgage prequalification provides only a cursory review of your stated income and how much you can afford to spend on your home. A pre-approval is much more valuable because it reflects that a lender has checked your credit, verified your records and approved you for a specific loan amount.

Here is the information buyers will need to gather to get pre-approved:

Income: A recent pay stub, two years of W-2 statements and tax returns will give loan representatives a look at your income and work history.

Assets: Bank statements, investment balances as well as any other assets you may own will be reviewed and considered as potential sources to cover down payment and closing costs associated with your mortgage loan. If a family member is providing a gift to assist with the expense, a letter outlining that the promise is not a loan helps leverage your liquidity.

Identification: Loan officers will need to validate that buyers are who they say they are and have the official confirmation that is necessary to complete a credit check. Buyers will need a driver’s license, passport or another form of government-issued photo identification. The lender will also need Social Security numbers of the applicants for the note.

After gathering the necessary documents, the lender will review the buyer’s credit and submit the information to an underwriter who will ultimately decide to approve or decline the pre-approval. The automated process can also point to various conditions that need to be met before approval.

While this once took days to unfold, computerization and formulas have whittled the waiting time to hours in most cases. Once approved, the lender will provide a pre-approval letter that can be used to verify your ability to buy the home. The pre-approval is generally valid for 90 days. If your search lasts longer than that, the lender and underwriter will have to assess

In a competitive housing market, a pre-approval letter is a necessity for a purchase offer to be taken seriously.

Once you have the confirmation in hand, rely on your Realtor® to jump start your housing search.

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