During the height of the real estate boom, getting a mortgage was as easy as picking out a new coffee table for the living room. Now, home buyers have to jump through rings of fire before they can sign on the dotted line.
Today, the first step in landing a home loan is obtaining a letter of preapproval. This means a mortgage lender has verified that you re approved for a mortgage of a certain amount over a fixed timeframe.
Preapproval letters are prepared even before you ve picked out your home. They remove some of the uncertainty in the home-buying process. In the current housing market, real estate agents and sellers won't want to work with buyers unless they have one.
Before you even get in my car, you want to get preapproved, says Gerry Bourgeois, a real estate broker and president of Towne & Country Realtors in Leominster, Mass.
With a letter in hand, buyers know exactly how much they can borrow and therefore how much house they can afford. A preapproval letter shows the seller and the seller s agent that the buyer is capable of buying their house. For most sellers, the issue is not whether they can get an offer, but whether they can close the deal, says Tara-Nicholle Nelson, a real estate broker in Oakland, Calif.
Agents see preapproved buyers as more serious (and more valuable) because they ve taken proactive steps to secure a preapproval. When it s time to make an offer, a preapproved buyer will be in a better position to negotiate.
Here s what home buyers need to know about the new rules of mortgage preapproval.
Shop around. And shop early.
When seeking preapproval, talk to a few different mortgage lenders to find the best mortgage package that suits your needs. Two or three lenders is customary, says Brad Blackwell, a national sales manager at Wells Fargo Home Mortgage in Danville, Calif. More aren t necessary to get a good deal because loan packages are generally very similar and pricing tends to be comparable, he says. And consult with lenders before you start house hunting. This way, you ll know how much you can borrow and which houses are in your price range, says Ann Stickel, vice president of affiliated services at Michael Saunders and Company, a real estate brokerage in Sarasota, Fla.
Prepare your financial biography.
Getting preapproved means a lender must review and verify a home buyer s income, credit and assets to ensure he can make the necessary monthly payments on a house. In the wake of the housing bust, borrowers must be more forthcoming when it comes to their finances, Stickel says. Your lender should tell you precisely what you need, but be prepared to include:
W2 statements (or 1099 income statements) for the last two years
Federal tax returns for the last two years
Bank statements for the last few months
Recent pay stubs and proof of other income
Proof of investment income
Know you're not obligated to one lender.
Preapproval doesn t bind you to a particular lender; it s just a promise -- albeit, a conditional one -- that the lender is willing to make the loan. The buyer isn t obligated to borrow from that lender.
Author:Christopher Miguez Phone: 318-452-7143 Dated: January 2nd 2013 Views: 5,670 About Christopher: ...
Louis Williams is the CEO for The Williams Team which now has 14 members total. His Team consists of four Listing Specialist, five Buyer Specialists, two Transaction Coordinators, Director of Sales, Listing Manager and Listing Assistant. The Williams Team has had nearly 100 Million Dollars in gross sales over the past nine years. Louis' Real Estate Group is among the top 1/2% of Realtors in the Greater New Orleans Area. He has also been awarded the prestigious NABOR Platinum Award for the top 1/2% of Realtors for the past five years and named the #1 Real Estate Group in the Area 2014.
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