Power Up with Loan Pre Approvals for Arizona Home Buying
The meeting of preparation with opportunity generates the offspring we call luck. Tony Robbins
We want to help by shedding some knowledge and light about why now is the time to Power Up with Loan Pre Approvals for Arizona Home Buying. Prior preparation to buy a home pays off much. Especially during a time of minimal housing inventory and many other buyers trying to land their ideal home before interest rates continue to increase by the end of 2018.
Elevate your home buying power! We encourage our client’s to get a “pre-approval” as oppose to the standard “pre-qualification,” and here is why. Upon the first mortgage “pre-qualification,” future loan borrowers meet with their lender. They discuss and ask questions about the budget goals and various needs during the mortgage process. The lender highlights and explains the various mortgage options available based on your unique financial needs and goals. This is a very brief part of the process. The “pre-qualification,” is information the borrower is providing mostly by verbal conversation to the lender unverified, therefore the loan amount has not yet been firmly approved. The rough figure is simply stated on the “pre-qualification,” form as the amount which you “maybe,” approved for. Resulting, in being a “pre-qualified,” home borrower does not carry the same weight that a “pre-approved,” borrower carries in providing documentation and proof to the potential seller entertaining your offer and hopefully not many others. With a “pre-approval,” the borrower has been thoroughly investigated and has provided a rough draft file overview of their finances to the underwriter who approves or denies loans.
Ask your lender to give you a “pre-approval.” You might be thinking, “but this is a lot more work!” And yes it is, it’s far much more involved and tedious. However, you will be thankful later on that you’re further along in the loan process, then other home buyers. A “pre-approval,” makes your offer packet stand out from all other finance offers to a serious home seller. As a home borrower, you will complete a full mortgage application with an application service fee. The lender will ask for a number of necessary forms of documentation to help the extensive financial background verification process and pull your current credit score ratings. At this first point of the process, borrowers have not yet found their home, so the house address shall be left blank on the application. Once the lender submits your mortgage loan file, they are now positioned to tell you of the real loan mortgage amount your conditionally approved for, the interest rate will be better identified, and you will walk away understanding what your monthly payment may end up being. With the “pre-approval,” a “conditional commitment,” is issued to you in writing for an exact loan amount, that now empowers you to look at homes at or below the approved price point.
Why does a Seller find your offer far much more desirable with your “pre-approval?” As a home borrower and their buyer, you’ve taken the first steps closer to obtaining an actual mortgage loan. Your offer will have a far much superior weight since the contingency period is now lessened with a “loan commitment,” that is only issued by the financial institution once your loan is approved. At this point in the transaction, the home is appraised anticipating an at or above the purchase contract sales price. Ultimately, as a home buyer your now saving both yourself and the seller valuable time. In a competitive home seller market, home buyers offers are taken more seriously and sound. Call us today to help refer proven lending professionals, you don’t want to get your offer beat out by another buyer who was further along in the loan process.
Once you find the home and the Seller has accepted your purchase contract offer, escrow is opened. the borrower’s income and credit profile are checked once again to make sure no changes have occurred since approval. It’s also common for the bank to ask or need more information from the parties in a real estate transaction, in the event the appraiser determines further structural concerns, identified either possible liens or litigation for the subject property. The “loan commitment,” is given to the borrower after the financial institution is certain to lend to the borrower. The commitment date issued on the “loan commitment,” scheduled near the close of escrow date as per the Resale Arizona Real Purchase Contract, rather than the acceptance date of the purchase offer. The Sellers are authorized as active parties to the contract to check the “loan commitment,” once the commitment date has passed.
Now that we have gone over the differences and why “pre-approvals,” are far more powerful than “pre-qualifications,” remember to stay diligent throughout the entire escrow process. It’s never a guarantee the financial institutions will give a loan until the “pre-approval,” has taken place to completion. Move forward with caution by additionally following and researching current interest rates to help save money in interest over the life of your loan in hopes of using the extra thousands toward paying off your home sooner than later.
We have lenders on standby to help with any and all questions or concerns. If you prefer to crunch numbers independently, send us a quick ask for our Lender Application by Invitation below.