April 6th, 2017 5:07 AM by Jackie Graves, President
who know me know that I sometimes (aka often) take the road less traveled — and
my homebuying story is no different.
My rental lease was ending and I
decided to browse listings online out of curiosity. I saw a cute property
listed for a reasonable price, so I emailed the seller's agent asking to see
it. I looked at the condo alone the next day, went home and played with
mortgage calculators, looked at my finances, and decided to take it a step
further by reaching out to my own agent. (Note that people typically get an
agent first). The agent asked if I had a pre-approval letter and I said,
"Huh?" Then he explained the pre-approval process and why it was so important.
So, I got in touch with a lender
and filled out a loan application. My lender asked me to provide W–2 statements, bank
statements, credit report and tax returns. This information
helps lenders evaluate borrowers 4 C's to determine how much they may be
qualified to borrow:
Your current and future ability to make your payments
or cash reserves: The money, savings and investments you
have that can be sold quickly for cash
Collateral: The home, or type of home, that you would
like to purchase
Credit: Your history of paying bills and other debts
lender determines that you qualify for a loan, they'll provide you with a
pre–approval letter outlining the maximum amount you are qualified to borrow.
Keep in mind that the amount your lender is willing to lend is not always how
much you should borrow. (Only borrow what you feel you can comfortably repay.)
Also, pre–approvals are usually good for only a limited time, so you should be
sure to discuss this with your lender.
Once you receive your letter,
it's time to house hunt (that is, if you follow the typical homebuying
timeline)! In regard to my story, the pre–approval played a major role in
showing the seller how committed and qualified I was as a buyer. Remember, I
bought during Spring Homebuying Season, so the market was hot — just like it is right now.
And, while I did things a little backward there's one piece
of advice I highly recommend: get a pre–approval letter
regardless. It helps educate you and the seller, which
ultimately makes the entire process smoother.
Continue to follow this series and visit My Home for the full run down on all things
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