A pre-approval is one of the most important ingredients in the home-buyers' recipe book here in Marin. Sellers and Listing Agents want to see a current pre-approval letter with every offer they receive. Many, if not the majority of properties currently on the market will receive multiple offers, and almost all of those offers will have pre-approval letters attached. Offers without a pre-approval go to the bottom of the pile. A pre-approval usually states that the lender, or mortgage broker has reviewed financial history, income, tax returns, verified pay, etc. Often, the lender has also had an underwriter review the file, and is in a position to state that loan approval is subject only to appraisal and certain other conditions. This pre-approval needs to be updated periodically, with current pay stubs and bank statements. Changes in employment or finances can derail the loan process, even if the buyers were recently approved.
Here are a few of the mistakes to guard against:
Do not change employment or sell your business while shopping for a home.
Don't make any large purchases--- cars, furniture, big vacations, etc.
Do not borrow money, run up credit cards, open new credit.
If friends or relatives are giving you money to finance your purchase, tell the lender. They will require a gift letter from the individual providing the money.
Do not move money between your accounts after having them verified. When you send money to escrow, the lender will re-verify the account. You cannot send more money from an account than the lender has verified. This can make for some very tense moments in the few days just before closing.
When getting serious about buying a home, put mortgage pre-approval at the top of your list, and do it before you walk into your dream home and find you need to make an offer right away. The process can take several days. It is important to talk with a local lender, one who is familiar with the Marin County real estate market. You will have the choice of using a banker, or a mortgage broker. A banker represents one financial institution, and will work to get you the best loan program offered by his or her bank. A mortgage broker has access to many different lenders and often has the ability to review hundreds of loan programs from different lenders in the search for the one that suits your needs. Mortgage brokers are typically compensated by the lender, so there is usually no added charge for their services. If you need recommendations for mortgage brokers and lenders, ask your agent or check this link to see some interesting information from a broker who has worked with many of our company's clients. He or she will have had the opportunity to observe lenders and brokers in action and to know who is likely to provide an effective solution to your home-financing needs.