Importance of loan pre-approval BEFORE home search

It seems that time and time again I will get a call from a willing buyer that is interested in buying a home, willing to commit to a licensed Realtor, willing to take the time to go see homes, and has not even spoke with a licensed mortgage professional yet (notice the word "licensed"). This is the very first step and most important step when finding a home to purchase. I tell customers that it really isn't fun finding the perfect home and then realizing you cannot qualify to purchase it.

When selling Real Estate in Albuquerque , the very first two questions I ask a potential client is "are you currently working with a Realtor and have you been pre-approved for a loan?". It may seem a little forward and every now and then I get some resistance, but in the end it makes the journey just that much more clear. People who are working with a licensed Realtor soon realize that they should be asking their Realtor about the property and that they really should speak with a licensed mortgage pro if they haven't already.

Some don't quite know the difference regarding a "pre-approval" and a "pre-qualification", and rightly so. The stronger of the two and the most accepted is the pre-approval. With a pre-approval, you are telling the seller that you have spoken with a loan pro and have provided the preliminary documents to obtain a mortgage for the asking price within the offer minus the down payment. A pre-qualification can be obtained be just telling a loan officer about your financial situation and not give any documents to verify your information at that moment. As you can see, a person may "stretch the truth" are not know their current situation. For example, a person may think that their credit score is a 660 and when the scores are actually pulled, the middle score could be a 635. Is most cases this could be a deal breaker for underwriting.

Just a little FYI when searching for Albuquerque homes for sale.

by Tim Fish