Home Loan Pre-Approval

It is Important to Get Pre-approved for a Home Loan Before Shopping for a Home

If you are serious about buying a home, it is important to shop for a loan, compare the interest rates and fees of different lenders, and get pre-approved for a home loan before you shop for a home.

Types of Home Loan Pre-Approvals

Loan Pre-qualification

This involves telling a loan officer about your desired purchase price and your income, debts, and assets.
This does not involve completing a loan application, nor providing the loan officer your financial documents, nor obtaining a copy of your credit report by the loan officer.
This is the weakest and most unreliable type of home loan pre-approval.
This is not recommended.

Loan Pre-approval

This involves telling a loan officer about your desired purchase price, completing a loan application, and providing your documents regarding your income, debts, and assets.
The loan officer obtains a copy of your credit report to check your credit scores.
This is a more reliable type of home loan pre-approval.
This is recommended.

Underwriting Loan Pre-approval

This involves telling a loan officer about your desired purchase price, completing a loan application, and providing all your information and documents regarding your income, debts, and assets.
The loan officer obtains a copy of your credit report to check your credit scores.
The loan officer submits your entire loan package to their underwriting department for their review and approval.
This is the most reliable type of home loan pre-approval.

This is highly recommended.

Why should you get an underwriting home loan pre-approval? For the following reasons.

The best time to shop for a home loan and compare lenders' interest rates and fees is before you find the right home, not after. You can take your time and do it right without being rushed.
Getting pre-approved for a home loan enables you to know how much you can borrow, so you know what home price makes sense for you.
It is very disappointing to find a home that you really like but discover that you cannot afford it. A loan pre-approval prevents this frustration.
When placing an offer on a property, you need to include a loan pre-approval letter to demonstrate to the seller that you have the capacity to buy the home (unless you are paying all cash for the home).
If you place an offer on a home without including a loan pre-approval, the seller will typically not accept your offer.
If you are already pre-approved for a home loan, I can negotiate a better deal for you on the home you want to purchase.
When homes are staying on the market only a few days before they go under contract, you need to be able to act quickly and place an offer on a home that you really like, to beat other buyers.
Lenders are more strict with their loan requirements nowadays, so it is a good idea to go through the loan approval process to overcome any potential loan approval obstacles.
It is better to get pre-approved for a home loan before you find the right home. You do not want to be scrambling to get approved for a home loan after you find the right home and desire to place an offer on it.
If you are not pre-approved for a home loan, you will be at a disadvantage both regarding negotiating a better deal and against competition from other buyers.
If you place an offer on a property and your offer gets accepted, you can lose your earnest money deposit, if you later discover you cannot get a home loan.

So, if you are seeking to buy a home, it is strongly recommended that you get a full underwriting home loan pre-approval. Failure to do so can lead to your own detriment.

Warning! Not getting fully pre-approved for a home loan prior to placing an offer on a home is one of the biggest mistakes that home buyers make. Make sure you have a full underwriter approval before you start shopping for a home. Do not settle for just a pre-approval or pre-qualification letter. This is the best and safest way to achieve your goal of home ownership.

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