Home Buying in 22205>Question Details

Chris, Home Buyer in Arlington, VA

Is it recommended to get pre-approved and how do you do it?

Asked by Chris, Arlington, VA Wed Jul 9, 2008

How important is it to be pre-approved and how do we do it? Should we look at banks, a mortgage broker, etc.?

Help the community by answering this question:


Hi Chris,

A preapproval is very important for a variety of reasons.

1. When you make an offer to purchase a property, it shows the sellers that you should be able to obtain financing. With the credit squeeze right now, more and more buyers are not getting their mortgage and deals are falling apart.

2. With a preapproval, you will know up front what price range you should be looking in for a home. It will save you and your REALTOR time and help you pinpoint appropriate homes.

3. By talking with lenders in the early stages of your home search, you have time to explore interest rates and mortgage options. When you are ready to move forward on a purchase, you should feel comfortable knowing you did your research and are getting the best deal.

I suggest talking to a variety of banks and brokers and finding out what they can offer you. Depending upon the mortgage program, rates can vary widely. Be clear on the interest rate, the term, the monthly payments, pre-payment penalties, deposit required, etc.

Best wishes with your home search

Christopher Rich - REALTOR
William Raveis Real Estate
Your Fairfield County Connecticut Real Estate Agent
0 votes Thank Flag Link Wed Jul 9, 2008

If you are a serious buyer and you want the sellers to view you in that light, get pre-approved. A copy of the pre-qual letter along with the offer will definitely help with your negotiations and may save you thousands. Further, if you are entertaining a "foreclosure" the banks will not even accept an offer without a pre-approval letter.

Good luck,
The "Eckler Team"
1 vote Thank Flag Link Wed Jul 9, 2008

Being so proactive on your part will pay off when you find the place you want. Your offer will almost certainly be on the Regional Sales Contract for Northern Virginia, you need to know that picking the wrong lender can hurt you. Basically, if for any reason your lender doesn't have the packet and funds to the settlement company on the settlement date, you would be in default under paragraph #26 and could lose your earnest money deposit, even if it isn't your personal fault. For that reason, I STRONGLY recommend that you deal with someone who is local with a track record and not an internet only lender. That way, if push comes to shove, you/your agent can physically drive to their office to find out what's going on. Check with your current bank to see what they are offering and concentrate on the APR more so that the quoted interest rate. Personally, I prefer clients use a direct lender rather than a broker, as fees can add up as Danilo pointed out in his post. I recommend Graham Setliff at First Savings Mortgage as someone you might want to contact at http://www.grahamsetliff.com .

Hope this helps and good luck!

AJ Heidmann, ABR, CRS, e-PRO
Cell 703-474-1260 Fax 703-518-8314
Coldwell Banker Residential Brokerage, Old Town Alexandria
0 votes Thank Flag Link Wed Jul 9, 2008
Yes, for several reasons.

1) You get to know what your mortgage payments will be and can adjust your purchase price down if you're not comfortable with payments as high as what you're approved up to.

2) You don't waste your time looking at properties you can't or don't want to afford. If you fall in love with a property you can't afford, you'll be demoralized moving forward.

3) Your offer is much stronger if you've already been approved and have a lender letter with it.

Speak with your bank, credit union or other financial institution you have a track record with. And every agent has a lender (or three) they've worked with in the past that they can refer you to.

One thing to take into consideration...it's NOT always about the lowest rate. Check closing costs and most importantly, references and track record. Can't tell you how many buyers I've seen and heard of getting screwed down the line by the lender they chose to go with based solely on "he promise of "the lowest interest rate".

If you need some recommendations on lenders, let me know. If you have one, ask your agent for recommendations as well.
Web Reference: http://www.LoudounScene.com
0 votes Thank Flag Link Wed Jul 9, 2008
Chris, every real estate agent in town wishes they could clone you! You'd like to get pre-approved [before] looking at houses so that you know how much you can spend, are aware of your financing options, and can get an idea of what your monthly payment and estimated closing costs will be.

I would highly recommend starting with a local, reputable lender. You can use your current banking institution or credit union, or ask friends and family members to give you a referral. Most real estate agents have good lenders that they use. You're not obligated to use any one lender and your pre-approval is usually free.

You can expect a mortgage professional to ask you to provide your social security number, your yearly income, how long you've been at your current job, and how much money you have in savings/checking/other accounts.

Be up front with your mortgage professional (and your agent) about your long term goals. How long do you expect to own the property? There are different loans that will be offered and it's important that you are able to evaluate your options.

You're defnitely on the right path to home ownership.
0 votes Thank Flag Link Wed Jul 9, 2008
Chris, Keep in mind that the preapproval process is one step further than prequalification. It is important to do BEFORE you start looking at homes to buy so you will know the maximum loan amount and any stipulations concerning the loan. To get pre-approved it means that the lender has verified your credit, reviewed your tax returns and verified your employment, earnings, and assets. The lender (whoever you choose to go to) will then give you a letter stating that it is willing to grant you a mortgage for a specific amount. You will be guaranteed a loan with that particular lender. (You can start with calling Coldwell Banker Mortgages at 1.888.240.6978) After you get your letter, you can start looking for your home to buy. While you're looking for your home, also continue to shop around to make sure you are receiving the most favorable terms with the lender. You can contact savings & loans, credit unions, mortgage brokers, mortgage bankers and government agencies (FHA or VA loans). Hope that helps!
0 votes Thank Flag Link Wed Jul 9, 2008
Hi Chris, Christopher is right on with his answer. Definitely the first step in the home buying process. If you go to your local bank, they can only give you their company's rates, terms, & costs. I'm a broker who works with a multitude of banks and mortgage wholesalers. My job is to do the "shopping" for you to see who can offer you the best terms. Give me a call or email and I can get you some answers usually within an hour! Thanks.
0 votes Thank Flag Link Wed Jul 9, 2008
Hi Chris, absolutely yes, get a preapproval. In addition to being a prerequisite to an offer to be taken seriously, it will also establish your buying power. It is the best first step to take to be sure that you are targeting homes that you can afford.

Good luck to you.

Jeannie Feenick
Weichert Realtors
Search and connect at http://www.feenick.com
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Wed Jul 9, 2008
One more point...

Just because you receive a preapproval from one lender, does not mean that you ultimately have to use them for your financing.

Christopher Rich - REALTOR
William Raveis Real Estate
Your Fairfield County CT Real Estate Agent
0 votes Thank Flag Link Wed Jul 9, 2008
Contact your bank! Tell them that you want to know how much you can afford.
0 votes Thank Flag Link Wed Jul 9, 2008
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