How and Why to be Pre-Approved

Bring Pre-Approved for a home loan for Truckee real estate is really the first step you need to take to buying a home.

If you don’t know how much you can afford it only makes the search process that much more tiring and disappointing when you find a home that you realize later you can’t afford. Knowing before you start your search can help narrow the search and find something your budget can easily handle.

You will want to sit down with a lender of your choice and go over all your options. In the closing costs page I mentioned there are different fees, points and costs involved with each lender. The lenders are competing for your business so make sure you let them know they are being shopped. Doing so will make them strive that much harder to give you a better deal. You can find a home loan a variety of places such as a bank, credit union, mortgage broker or even a private lender such as a seller of the property. Many times private lenders are higher in interest rates but may be an option if your credit cannot get you a loan through a bank. Using a Mortgage Broker is typically more expensive but they have access to hundreds of loan options and can often find you a better interest rate.

Once you find a lender, they will need documents from you proving your income, debts and liabilities and any assets. All these numbers come together to determine how much home you really can afford. And remember, the home loan is not the only cost involved. You will need home owners insurance and taxes. These can be included in the monthly payment if you wish.

After the lender reviews all your finances, you will be issued a letter of pre-approval stating how much you can afford in a home. If you are not given one, ask. Many time the lender will make it a generic letter stating you have been pre-approved but a trick to keep in mind is to stay in close contact with your lender and when you find a home you like, have the lender write the letter for the exact amount you are offering.

Here’s why: Say you are pre-approved for a $300,000 home. You find a home for $270,000 but it’s been on the market a while and you wish to offer $250,000. If the seller knew you were approved for the $300,000 they may be less likely to accept your offering knowing you can afford more. If you submit a pre-approval letter stating you are approved for the amount you are offering, the seller doesn’t know whether you can afford any more and may accept the offer for fear of loosing the sale.

This is just one simple negotiating technique where having a pre-approval letter in hand, ready to go can really save you money. For more information on becoming pre-approved for a home loan in the Tahoe and Truckee real estate market, please contact me anytime! I look forward to helping you find the right Tahoe or Truckee home!