What a wonderful Sunday….and summer so far! 🙂 Ok…I admit it…I don’t like it really hot, so this summer has been wonderful to me! I am running a bit late this morning as we have been getting ready for the Clark County Fair that starts on Friday. If you are out and about at the Fair, (and you read this!), please stop and see Chris Berg, or I….we have prizes to give away, and a special prize for readers of this weekly blog.
Chris has been trying to get me over the pros/cons list of ALL the programs this past couple of weeks, but he has been really busy with pre-approvals….so I thought we could talk a little about them instead this week. Pre-approvals are so important on quite a few levels, and not all of them are readily known, so let’s go through them….
What is a Pre-Approval? What does it take to get one? How long does it take to get one?
A pre-approval from a lender is a snapshot of your current financial situation….DON’T change it once you get your pre-approval without discussing any changes with your lender first. Even paying off, and closing a credit card can negatively affect your credit. Weird….I know!
A pre-approval will require the lender to have copies of your W-2’s for the past couple of years, 3 months of bank statements, 1-2 months of pay stubs, and of course, the lender will pull your credit. It can take about a week (on average) for a pre-approval from a lender. Remember to ask your lender if your pre-approval has been manually approved by the underwriters. These are the folks with actual power to approve your loan, and once you have the manual underwriters approval, you are golden! 🙂 It may take a bit longer, but it is worth it!
Remember that when getting a pre-approval that the lender is actually pre-approving you for a monthly payment and not for the actual dollar amount of the home purchase. WHAT?! Yeah…it is true. The way it works with pre-approvals is that the lender looks at your income, and the takes away your known debts like car payments, credit cards, etc, and this is your debt to income ratio. Each loan looks at a different percentage of debt to income ratio for your pre-approval. The lender then adds in an average for your home insurance and your taxes since this has to be added into your payment…and then your lender has to look at current interest rates. Most lenders will base your pre-approval on a higher interest rate since your interest rate can’t be locked until you have a signed around purchase/sale (an offer that is mutually accepted by the person with the legal authority to sell the home.)
Your pre-approval amount can change over time depending on interest rate fluctuation, property tax fluctuation, and more. A pre-approval is only good for 90 days and then must be updated.
As a home buyer you need to be aware of your budget, and the debts that are not part of that pre-approval process. We all have lives, and you want to enjoy yours…not be house poor….or to not have enough money left over at the end of the month to do those things that you want for fun, or for the home.
Why is the pre-approval so important before you start looking at homes?
A pre-approval with a lender is important to both you and your agent for a couple of reasons. For the buyer the pre-approval is important as it helps you to know what you can comfortably afford, and what types of loans what might work best for your family. You don’t go grocery shopping without knowing how much money you have in the bank, you should never go home shopping without knowing how much payment and home you can comfortably afford. Your home payment is much more than your mortgage….A mortgage payment will include your principal on your loan, your interest, your property taxes, and your home insurance….this is what’s known as a PITI payment. (Principal, Interest, Taxes, and Insurance).
For your agent having a pre-approval already is important because your buyer’s agent wants to show you homes that you will love, and that you can afford. We don’t want to show you a home that you fall in love with, but find out you can’t afford. When this happens it is hard to find another home you love as much as the ‘home that got away’. It is better to start looking at home that are in a price range that is comfortable for you, and your family.
Another reason for a pre-approval is that if you find a home you really like you can’t even make an offer without your agent being able to include a pre-approval letter from your lender within a couple of hours. In this market your offer can not, and will not, be considered by the seller without the pre-approval letter. Homes that are in good shape and that are well priced sell fast, and you can miss out on the home you want waiting for a pre-approval to come in.
In short, your pre-approval is your passport to you home buying adventure. First step in any home buying adventure should be the home buyer classes, but the second step is talking to an experienced lender who can offer ALL the loan programs. I know a lot of real estate brokers will tell you to talk with an agent first, but realistically there isn’t a lot we can do for you without that pre-approval letter from a lender. A good lender will sit down with you and see where you are at, where you want to be, and help you with a plan to get there. Remember that, just like a buyers agent, the lender works FOR YOU! We are in the customer service industry….this means that we provide services to you…. give me or Chris Berg at Pinnacle Mortgage (503-320-0925) a call and we will be happy to help!
…until next week… have a good one, and I hope to see you at the Clark County Fair!! ;-D
If you know anyone who is thinking about buying a home, our next class is Saturday, August 11, 2012, at the Vancouver YMCA located at 11324 NE 51st Circle from 9am-12pm With reservations, lunch is included…. 🙂 Don’t forget to stop by and see us at the Clark County Fair 8/3 – 8/12…. we have prizes to give away… 😀
Please let me know if you have any questions! And again as always, if you are looking for a buyer’s agent, please give me a call or drop me an email…I would love to help you with your home buying adventure!
Please call, email, text, or even facebook me (at Tracie DeMars Real Estate Q&A) anytime with any questions, or if there is anything I can do to assist you with your home buying adventure! As a buyers agent, I am, as always, here to help!! 😀
Thank you again for your business and for your referrals!
If there is anything you would like to see on here…please let me know and I will make it a weekly note!
…as always…if you have already purchased a home, or no longer would like to receive these emails from me, please let me know and I will be happy to remove you from receiving any more.
Thank you again for attending the home buyer education classes, and I hope that you will continue to refer the classes out to your friends, family, and co-workers. Upcoming class dates and times are located atwww.freehomebuyerclasses.com. Just click on the link on the left hand side. Or you can go towww.learningtobuyahome.com and click the links.
We appreciate your referrals and word of mouth! Also, if you have somewhere that we can place the flyers at, please let me know….
Next Week: Home Loans Pros/Cons (he has been busy with pre-approvals, but is working on it. Please call and/or email and I can give you what I currently have)
Last Week: Buyers agency, and buyer broker forms myths & truths
Have a great day, and I will talk to you soon,