Pre-Approval Letter - How To Use It To Get Your Dream Home
When house hunting, many buyers make the mistake of waiting to
contact a lender until after they have located their dream home.
As a buyer, you will be in a much stronger position with a
seller if you are pre-approved.
Pre-Approval Letter
To effectively house hunt, you must know the amount you can
borrow from a lender. There is nothing worse than find your
dream home, but failing to qualify for the amount you need for a
loan. Avoid this by asking your lender to pull your credit
information and to let you know what needs to be done to get a
pre-approval letter. If you are going to have problems with
getting a loan, it is better to know about it as early as
possible.
Sometimes buyers resist contacting lenders because it's not the
enjoyable part of home buying and they're afraid an extra credit
check will reduce their credit score. This resistance is penny
wise and pound foolish. Buyers who get their loan arrangements
lined up at the beginning of the house buying process are really
doing themselves a favor.
Much of the country is experiencing a hot, sellers' market. It
is not unusual for a seller to get more than one offer on the
same day. If that happens to you, your pre-approved status can
give you an edge over the competition. In fact, it can make a
seller choose you over another bidder.
Presenting Your Letter to a Seller
When you tell the seller you want to buy their property, give
them a copy of your pre-approval letter. They will probably
recognize the value of the letter, but don't depend on this
assumption. Make sure the seller realizes the loan is already
approved.
As you give the seller the letter, explain to them that you are
serious about making the transaction go smoothly and, for that
reason, you have already been through most of the loan
application process. Point out that the lender has pulled your
credit info and you've provided copies of W-2s, pay stubs, and
all the other things the lender needed to decide that you do
qualify for a loan. Tell the seller that the only remaining
thing to do is to give the lender a copy of the contract that
you and the seller sign, and the property needs to appraise for
an appropriate amount.
Taking this approach puts you in a very strong position. The
seller knows you are not just wishing; you are capable of buying
his property. One of a seller's worst nightmares is signing a
contract with someone, taking his property off the market,
wasting time and then finding out that the would-be buyer cannot
get a loan. On the other hand, you and your pre-approval letter
are dreams come true.
Put on your shining armor and get pre-approved by a lender. Once
you have the letter in hand, get out there and find your dream
home.