Many buyers get frustrated when their Realtor asks if they have been pre-approved. They think, “all I want to do is look at houses, we can worry about the pre-approval later.” We understand your frustration, but let us help explain why the pre-approval process is so important.
A preapproval is different from a prequalification. With a prequalification, the lender relies on information provided by the buyer to estimate how much the borrower could qualify for. With a preapproval, the lender verifies the borrower's information and documentation to determine exactly how much it would be willing to lend to that borrower.
The documents to get preapproved are the same documents that you would need to get a mortgage.
• Pay stubs.
• Last 2 years' W-2s.
• Last 2 federal returns.
• Two months' worth of bank statements of all types of accounts.
• Your credit report.
A preapproval is not a loan commitment, but it helps speed up the underwriting and loan approval process.
A Pre-approval Letter shows that you can buy a house. Unless you plan on buying a house for cash, you will need some sort of financing. If you cannot obtain the financing, say hasta luego to the idea of buying a home, for now. There is not much more that is frustrating (to buyers and Realtors alike) than to look at houses for several days only to find out that you cannot obtain financing to buy one. Therefore, we usually ask for a pre-approval so we can both have reassurance that you can buy a house.
Second, a Pre-approval Letter helps define your search. It lets you know what you can spend, so it saves time and energy from searching for houses that you cannot afford.
Think of the emotional drain of finding the house of your dreams and then the bank says that you cannot afford it. We would rather you not look at those houses that you cannot afford. If you can only afford a $100,000 house, we need to make sure you are only looking in that price range. If you look at too many houses outside of your price range, you will not enjoy the houses in your price range as much. A Ford Focus never looks as good after you drive a Lamborghini.
Having the letter allows you to have more leverage in negotiations with the seller
Having a pre-approval letter really makes your offer look good to the seller of the house. They are more willing to negotiate with someone who is pre-approved than someone who isn’t. Plus, if there are multiple offers on a house, yours will be ranked higher due to the fact that you are already pre-approved. It is less risky for the seller than looking at an offer from someone who isn’t.
A Pre-approval letter is better than being pre-qualified. Many banks will give you an informal estimate of what you can afford, and this is known as pre-qualification. It is not a statement of fact, but rather an opinion. Make sure you get an official Pre-Approval letter. This is a statement of fact, and will hold a lot more weight than a pre-qualification letter. It takes more work to get pre-approved, but it will save you a lot of time in the long run.
We hope this gives you a few reasons why it is so important to get pre-approved. If you have a hard time starting the pre-approval process, give us a call at 281-907-6401, and visit us at
TxPremierMortgage.com, and we can help lead you in the right direction. Most of our pre-approvals can be given to you within the same day as long as all information is provided by you upfront.
