Get Pre-Approved The Right Way!
Before I take people out to view homes, I make sure they get pre-approved, and I check the process with their lender. I ask the lender if they received proof of income, bank statements, tax returns, etc., to prevent issues arising later.
Many times people protest getting pre-approved. They are eager to start the fun part of looking at homes, and even though, a pre-approval doesn't take long, they are resistant to doing it. They tell me that they have a stable career, good credit, and that they prefer to find the house first. I explain that the pre-approval is essential for understanding their budget down to the penny, for being prepared to make an offer on their dream home, and for doing their part to ensure that there are no unpleasant surprises down the road. Getting pre-approved correctly saves time, money, and heart-ache.
When I was a new agent, I sometimes gave in when potential clients told me that they preferred to get pre-approved later. They assured me that they had good credit and income, and since I knew their jobs, I showed them places. And, sometimes all was well. Sometimes, though, things didn't work out.
Once, my clients were self-employed and while they had very good income, they had too many debts to get a mortgage as high as they wanted, and needed. We were all disappointed. We all lost time, gas and energy spent viewing houses. They had the additional heart-ache of missing out on their dream home. I lost more time than them -Time I had spent 'behind the scenes' searching for appropriate houses and scheduling appointments.
Once, a woman came to me in the summer. She was pre-approved and in a rush to find a house before the start of school. She assured me that she had sent her lender everything. I took her word for it. We viewed a ton of houses and found one she liked. We had an inspection and negotiated repairs. The attorneys drafted the contract, and she and the seller signed it. Next, it was time for the appraisal, but the bank refused to move forward with it. Her lender had never checked her income or tax returns. My client had been issued a pre-approval based on her credit score and what she declared she made. She didn't qualify for the amount on the 'pre-approval' she had been issued. No lender or bank would issue her a mortgage for the amount she needed to buy a house in the area. Very upset, she took a break to recharge and save up. A year later, we hunted again and found a home, but it was much farther away from where we had looked initially, and the price-tag was much lower.
If you are serious about buying a home, get pre-approved, and make sure your lender verifies your income and assets. There are many steps and many people involved in buying a house. Mistakes happen, life happens. I have seen attorneys take so long with the contract that the sellers received and accepted a higher offer. And, once a buyer lost her job a week before closing and the bank refused to loan her money. Many things are out of your control. The pre-approval, though, is the very first step in the home-buying process, and it is very much in your control.