Keep the horse before the cart


By Kathy Henne

Contributing columnist

While many buyers are aware that a mortgage pre-approval letter increases their buying confidence and power, most may not understand exactly why pre-approval is so important. Why should you jump through the application hoops before even beginning your home search?

First, you’ll know exactly how much loan you can afford, making your initial home search much easier. Why waste your time looking at homes either out of you reach or well below your financial grasp?

Second, you’ll find out what type of loan you qualify for – Conventional, FHA, or VA. Not every home will meet the FHA or VA guidelines as to the condition of the home. You don’t want to fall in love with a property and then find out the property will not qualify for that type of loan.

Third, pre-approved buyers stand on solid negotiation ground. Sellers working with well-qualified buyers are more likely to accept a reasonable offer and less likely to stall on terms and conditions.

Notice that the topic of this column is “pre-approval” and not “pre-qualification.” What’s the difference? Pre-qualification is easy – you provide basic information to a lender, and in a few short minutes, you have an answer. Pre-approval requires strict verification of documentation relating to your employment, credit history, sources of income, etc. It takes more time, but is more accurate and carries more weight.

Understand that pre-approval is not binding, and is still subject to a satisfactory appraisal on the prospective property purchase. If your financial situation changes, interest rates rise or fall, or the deadline passes, a recalculation will be necessary; but a little legwork now will pay off handsomely as you approach the finish line on your contract.

Contact the Kathy Henne Team RE/MAX by calling 937-778-3961.

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