The Lender Process – Part 1

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Why Get Pre-Approved with a Lender?

As you are beginning the process of a home search, it is important to figure out your housing budget.  The budget relates to your monthly total housing payment as well as your purchase price budget.  The cost of the home you can afford is heavily dependent on your credit profile as a borrower (and/or co-borrower).  That is why is of the upmost importance to seek pre-approval from a lender before shopping for you home.  Nothing is worse than making an offer on a house you have your heart set on and then learning that you cannot obtain financing right before you close on the home.

  1. Establish a solid relationship with the right Lender:  Lenders play an important role in the home-buying process.  It is important to work with a Lender that you trust and that will deliver the service needed to close on the home.
  2. Figure out what you can afford:  Most Lenders evaluate your credit-worthiness based on credit scores, proposed loan to value ratio, and monthly debt-to-income ratios (DTI).  A Lender will show you exactly how much house you can afford based on those factors.
  3. Get Pre-Approved:  Getting pre-approved with a lender allows you to ensure you do not have any skeletons hiding in your “credit closet”.  This will allow you to start the home search process in confidence and show your real estate agent that you are serious about purchasing a home.
  4. Offer in Confidence:  With pre-approval in hand, you can submit bids to buy homes in confidence.  In a competitive environment, where inventory is low (just like today), it is imperative that you know your financing budget so that you submit a strong bid.
  5. Smooth Closing without Hiccups:  Pre-approval limits the amount of due-diligence a lender is required to undertake, which in turn, frees up the lender to expedite their process.  This ensures a smooth and successful closing.
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