Have you, a friend, or family member ever put in an offer on a home, but didn’t get the house? Or witnessed a home buying experience that became stressful and hectic when there were “last minute conditions” that the underwriter requested?
Are you a slightly anxious first time homebuyer worried about getting the process started?
I am assuming that you could probably answer yes to at least one of my questions, but don’t worry—I have a tip that may help you avoid all of these negative feelings and experiences.
Getting Pre-Approved by a local lender is the first step you need to take as soon as you are even *thinking* about buying a home. It will arm you with the right tools to know when, how much, and how you are going to buy – whether it is now or in a year.
The tip that I am going to share will take you one step further than just getting Pre-Approved…
Get a loan approval before you start shopping for a new home!
Understanding Mortgage Loan Pre-Approval vs. Approval
So, what’s the difference between being pre-approved and fully approved?
Getting pre-approved involves filling out a loan application, having your credit pulled, and running your loan profile through an automated underwriting system – a computer generated loan decision. As long as the system says, “Yes!” then the loan officer can issue a pre-approval. The process can be very quick and efficient, but heavily depends on your loan officer.
A full approval takes the process one step further. Not only do a loan officer and an automated underwriting system review your loan profile, but the underwriter—the person that will officially approve or deny your loan—will review everything. All you have to do is provide the documents to support your loan application (pay stubs, tax returns, bank statements, etc.) and sign preliminary disclosures to allow your loan to be processed and underwritten, all of which cost you NOTHING. These things will have to be provided once you are under contract anyway, so why not get it done now? Making the extra effort to obtain a full approval will ultimately set you up for success!
Oh by the way… did I mention it only takes me 24 hours to get you a full approval once I have your documents?? It can take some Loan Officers longer than that to get you a pre-approval. Crazy, I know.
How does a full approval solve the problems I referenced at the beginning of this blog?
You will have a fully underwritten approval letter, commonly referred to as a commitment letter. You can present this letter when you submit an offer, which tells the seller and listing agent that you are a very well-qualified buyer, and they should have no worries about accepting your offer based on financing. It would be very similar to them accepting a cash offer.
The underwriter will provide you and your REALTOR® with a list of all of the documentation that you will need to buy the home—this will hopefully eliminate those last minute, “Umm, we need this now,” phone calls. This will also allow you to start collecting the documentation immediately instead of later in the process when you’re trying to do inspections, appraisals, close on the home, and pack your belongings.
You can ease your anxieties about applying for a loan and getting approved. You will be fully approved before you even buy the home, so you can start the process now and feel good about your home search.
If you have a complex loan profile—history of delinquencies, a lower credit score, you’re self-employed, have multiple sources of income—you can have an underwriter review those complexities and validate that you are approved. By doing this ahead of time, you won’t be waiting until you are under contract and then run into unforeseen circumstances that hold up the works.
If you want to feel confident about your home buying experience, get Approved to Move™ before you find your home. Take the extra step to set yourself apart from the pre-approval crowd—it may just be the differentiating factor that helps you buy the house of your dreams.
Author: Katie Bradner (Loan Lady Kate)
Company: Embrace Home Loans