Thursday, March 31, 2016


1) Get pre-qualified and then;                                                                 
2) Get pre-approved for a mortgage from a lender. 

I’ll explain the difference in a moment.

Serious buyers who are aware of the importance of these steps, put themselves in a powerful home buying position. Once you’ve done this, you’re now a strong buyer ready for action! House hunting can be fun, but before you get deeply involved in your search for the perfect home, KNOW YOUR BUYING POWER! 

People who skip this step will often be wasting their time, their agent’s time and the seller’s time. That’s a lot of wasted time because you have an assumption of how much buying power you have, which is frequently incorrect. Without running ratios against your financial picture, many people are way off on how much home they can afford. Get these steps done!!! 

STEP 1: PRE-QUALIFICAITON (your unofficial initial snapshot): 
You’re going to provide a snapshot of your financial situation either verbally or in writing. The lender will apply ratios to the numbers you provide (an agent can do this portion of as well.) The point of a pre-qualification is to confirm the amount of a mortgage you can expect to be approved. 

Once you have been pre-qualified, your agent can start to set appointments for you to see houses. At the same time, you’re going to begin step 2 (pre-approval). 

STEP 2: PRE-APPROVAL (official, but not committed): 
If the pre-qualification phase is within an acceptable range for you (the amount that you are likely to qualify for in a mortgage), then do the pre-approval phase. 

This is where you’re going to provide the lender with proof/documentation of your financial situation. The lender will officially verify all of your information including a thorough credit check. If you pass their requirements, the lender will give you an official approval showing how much money they will lend you. This doesn’t bind them to lending you the money. If anything changes in your financial situation, the whole approval process may have to be restarted (see After you get pre-approved below). 

1) First of all, you will know your TRUE buying power. You won’t be wasting your time, your agent’s time or the seller’s time! This is really important for everyone. 

2) If you find the house of your dreams and you make an offer to buy, you’re offer will be considered stronger than someone who hasn’t been pre-approved. In fact, if another party puts in an offer for more money than your offer, but they haven’t gone through the approval process, a seller will often choose to sell to the buyer who already has the approval. 

3) If you’re up against a cash buyer, your offer will have similar strength. If you offer more than the cash buyer, the seller will probably accept your offer. 

4) You won’t have to go through the whole mortgage documentation process since most of it is already done. The lender will take another look at your situation to see if anything has changed, but assuming it hasn’t, the process is mostly done. Of course the bank has to make sure that the house you’re buying has proper value rations etc., but the hard part of the mortgage process for you is already done. 

1) Don’t buy or lease a new car
2) Don’t buy a new boat (I work in North Port Florida)
3) Don’t open or close any credit lines.
4) Don’t accept $20k from Aunt Lucy without notifying the bank first and getting their         feedback.
5) Don’t do anything that changes your credit situation positive or negative! 

Any changes that you make after you’re pre-approved can cause you to have to re-do the approval process. 

LOAN COMMITMENT: Once you find your property, make an offer and receive an acceptance of your offer, your lender will look to see if you have any changes from the pre-approval process. If no changes, the final step from the bank will be to give you a loan commitment. The commitment is issued by your lender when they have approved you and the house you are borrowing against. The loan commitment is only given when the bank commits to lending you the money. 

I can’t stress enough how important your real estate agent can be in helping you move from buyer to owner. Call around for an agent in the area you are interested in buying within so that you will have someone on your team who is looking out for your interests. Make sure you’re selecting an agent in the area, not 10 miles away. By using a local agent, you have the best opportunity to find off market properties that meets your criteria, and more attentive service from the agent. 

If you’re buying in North Port, call me or any of the other local North Port agents. If you’ve read this article from top to bottom, I’m going to assume you’re a buyer. Good luck house hunting. If you have unanswered questions, send me an e-mail or call me directly. 

Scott's phone number: 941-882-5494 Ext 701 
To send a message, click here: Message to Scott

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