Tip 2 – Get Home Loan Pre-Approval First –
This series of essential tips for Arizona home buyers are designed to help you through the home buying process – a road map to follow while buying a home for sale in Arizona to ensure a smooth transaction – and, most importantly, a rewarding home ownership experience.
Loan Pre-Approval provides peace of mind that you can buy any home you see in your price range and you have the competitive edge against any buyer who requires a loan. Only a cash buyer is in a better situation than a buyer with Loan Pre-Approval.
Pre-Approval means you should be able to get the loan as long as nothing changes in your job status, your financial position or your credit score. MAKE NO CHANGES!
- DO NOT CANCEL CREDIT CARD ACCOUNTS you haven't used in a while. That credit history is important to you.
- DO NOT MAKE ANY EXPENSIVE PURCHASES or ORDER IN ADVANCE THINGS FOR YOUR HOME at this time. You want to preserve your cash and not change your credit score once you are loan Pre-Approved.
A Pre-Approval letter makes you very competitive over other buyers vying to purchase your dream home. One of the first things most sellers are going to ask their agent when receiving an offer is how well qualified is the buyer to complete the purchase.
Sellers of homes for sale in Gilbert, Chandler and Mesa AZ want to know the buyer is not going to be turned down for the loan during escrow, long after the contract was signed and their home has been off the market. Arizona home buyers want the same peace of mind knowing they will be able to buy the home of their dreams.
Buyers, just like sellers, need to understand the huge difference between a Pre-Qualification Form (PQF) and a Lender Pre-Approval.
What is a Home Loan Pre-Qualification Form (PQF)
For a PQF often a lender calls a prospective buyer they probably have never met to ask about total income, total debt, do they own or rent and the payment, how many months remain on revolving credit and car loan, if they have had a bankruptcy, foreclosure or short sale, length of time in the same job, amount of savings and then run a tri-merged credit check. The buyer can not be required to fill out a loan application, provide: pay stubs, W2's or personal tax records in order to get a loan PQF. Normally, there is no time to get this information when the buyer went shopping for a home without being lender pre-qualified. Because they just found their dream home, they need a PQF to submit with their purchase offer ASAP. Not all that reassuring, is it?
What is a Home Loan Pre-Approval?
For a Pre-Approval a lender does everything that was done for a PQF plus the lender requires a completed loan application with copies of last 2 years of income tax returns, W2's, last 2 pay stubs, employment verification, etc. and may even submit your loan application through an automated desktop underwriting system before having loan processor and underwriter review of the file for completeness and identify any red flags to be addressed before the loan can be funded and escrow closed.
Every seller wants their Arizona home buyer to be loan pre-approved when an offer is made. Be smart and get Loan Pre-Approval upfront. You may just get the Gilbert AZ home of your dreams you have always wanted for far less than you otherwise would have had to pay!
STAYED TUNED - Anything in big doses is hard to digest. Instead of blasting you with all home buyer tips, you are going to receive my recommendations in small bites…
So this is the second installment. If you are buying a home now and want the complete series of tips at once, email me and it will be sent on its way to you. Otherwise, my blog will eventually include all home buyer essential tips. Continue to Buyer Tip # 3 Post
Author: Sam Elam, Arizona Associate Broker, CRS, GRI, e-PRO
Berkshire Hathaway HomeServices Arizona Properties
Contact Sam to discuss your Arizona home purchase plans and schedule an appointment to see how he can help make your plans become a reality.