One Homebuying Step You Don’t Want To Skip: Pre-Approval
There’s one essential step in the homebuying process you may not know a whole lot about and that’s pre-approval. Here’s a rundown of what it is and why it’s so important right now.
What Is Pre-Approval?
Pre-approval is like getting a green light from a bank Lender. It lets you know how much they’re willing to let you borrow for a home. To determine that number, a lender looks at your financial history. According to Zane Petersen Real Estate - Lake Minnetonka, these are some of the documents a lender will ask you for during this process:
- W-2s from the last two years
- Tax returns from the last two years
- Pay stubs from the last 30 days
- Bank statements from the last 60 days
- Investment account statements (if applicable)
- Two years of history of where you’ve lived
The result? You’ll get a Pre-Approval Letter showing what you can borrow and Zane Petersen Real Estate will keep a copy of this on file for you to attached to your Purchase Agreement, the Offer you make to your Seller for their Home. We will also have your Pre-Approval Letter automatically renewed by the Lender your chose, every 30 days as needed so you stay up-to-date. But keep in mind, that any changes in your finances can affect your pre-approval status. So, after you receive your letter, avoid switching jobs, applying for new credit cards or other loans, or taking out large sums of money from your savings.
How It Helps You Determine Your Borrowing Power
This year, home prices are expected to rise in most places and mortgage rates are still showing some volatility. So, since affordability is still tight, it’s a good idea to talk to one of our Banking Broker Lenders about your home loan options and how today’s changing mortgage rates will impact your future monthly payment. Using one of our Banking Brokers can give you the edge you need to drop your interest rate way down while making your monthly mortgage 'ultra-affordable'.
*Term - Banking Broker = A Lender whom has access to multiple banks. The multiple competing banks acts like 'Ebay', and often will be able to offer you the lowest rate available to you:
- Every bank has different 'offerings' and programs to give you the lowest rate, our Banking Brokerage Partners have an underwriting department that could make your purchase through Zane Petersen Real Estate, exceptional, by making exceptions just for you, so that you gain a lower interest rate and/or lower monthly mortgage than you get if you shopped a Lender of your choice.
- Keep in mind that our Lending partners also offer incentive programs that can give you money towards your Closing costs, especially if you are a 1st time home buyers. ...and this can sometimes exceed $16,500.00 or more.
- Lastly, every think about paying off that car or consolidating debt when you take out your new Home Loan, we'll we could make this possible for you so that all you have is your new monthly home mortgage payment, and not a mortgage payment with all your other Loans that are due. Financially, this may be what you are looking for and make owning your new home through us a smart choice and a Win!
The pre-approval process is the essential first step, before you go shopping, because if you find a home you Love, it likely won't be there if you wait to get pre-approved. Many Pre-Approvals through Zane Petersen Real Estate Partners can be done in just a few hours and a pre-approval will determine the maximum amount you can borrow, pre-approval also helps you figure out your budget. You should use this information to tailor your home search to what you’re comfortable with as far as a monthly mortgage payment. That way, you don’t fall in love with a house that’s out of your comfort zone.
How It Helps You Stand Out
Once you find a home you want to put an offer on, pre-approval has another big perk. It not only makes your offer stronger, it shows sellers you’ve already undergone a credit and financial check.
When a seller sees you as a serious buyer, they may be more attracted to your offer because it seems more likely to go through. As Greg McBride, Chief Financial Analyst at Bankrate, says:
“Preapproval carries more weight because it means lenders have done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements. A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”
Pre-Approval: Bottom Line
If you’re planning on buying a home, getting pre-approved for a mortgage should be one of the first things on your to-do list. Not only will it give you a better understanding of your borrowing power, but it can also put you in the best position possible to make a strong offer when you find a home you love. Connect with a trusted partner right now by calling 763.843.2905 and I will help you perform at your absolute Best. ...and all that matters to us is that you WIN your next Perfect Home at the lowest price possible, with the lowest monthly payment!
Zane Petersen (LPS | CLHMS | PMP) - Zane Petersen Real Estate Lake Minnetonka
763.843.2905 or [email protected] or www.zanepetersen.com
Brokered by: Coldwell Banker Global Luxury on Wayzata bay
