Hot Tip for Being a Successful Home Buyer
To take advantage of the great deals on homes for sale in all Orange County CA neighborhoods today, you must be pre-approved for a home loan by a direct lender in order to be ready to buy. End of story. You cannot realistically go shopping for a home in today’s market without it. So read on to find out what a pre-approval for a home loan is and why it is no big deal, what paperwork you’ll need, and why it’s so important.
What’s a Pre-Approval for a Home Loan?
A pre-approval for a home loan is exactly what it says – it is the confirmation from a direct lender that you have the financial capability necessary to be approved for a home loan. In today’s chaotic financial market, all sellers are requiring that the buyers have actually submitted financial documents to their lender and that they have proven themselves capable of “performing.” You will hear more and more business terms used in home buying transactions these days, since many home sellers ARE businesses – specifically, banks that have had to foreclose on borrowers who could no longer perform. These banks are for sure businesses and buyers have no option but to play by the banks’ rules. Here is the typical requirement for an offer package from a buyer who is putting in an offer on an REO property:
Offers to be accompanied by: approval letter by direct lender; FICO scores, deposit check (at least 1%) & proof of funds.
The pre-approval is a letter that is written by the direct lender on your behalf. It states the purchase price of the home that you are approved to buy and the amount you are pre-approved to borrow – this is called the loan amount. It also states your FICO scores. In this market it also will have the detailed report generated by Desktop Underwriter – the software the lenders use to analyze your financial situation. This is referred to as DU approval. This is the letter that the seller requires with you offer.
What Paperwork Do You Need to Get Pre-Approved For a Home Loan?
To get your pre-approval for a home loan, you need to submit the following documents to the direct lender:
- 2 Recent Pay Stubs
- Most Recent W2 Form
- 2 Most Recent Consecutive Bank Statements – ALL PAGES
That’s it. Now, that’s not so bad, is it?
Why is Loan Pre-Approval So Important To Home Buyers?
- You will know exactly what your purchasing capability is. While you may think you can buy a house for sale in Orange County for teh bargain basement price of $350,000.00, you will have the added peace of mind when you know that the direct lender agrees. Or given today’s low low interest rates – you may actually qualify for more. That’s what we call a quality problem!
- You will know where your comfort level is with your monthly payments on your new Orange County home. The pre-approval process will also give you a good estimate of you monthly payments – including property taxes, insurance, and Home Owners Association dues.
- You will be able to act quickly if there is a great Orange County home for sale at a great price. I can’t tell you how many times in the last few months I have worked with clients to put together offers on homes that are priced very agressively, where 5, 10 , and even 25 OTHER offers have come in WITHIN THE FIRST 2 DAYS THE HOME IS ON THE MARKET. And since they were pre-approved, we were able to be competitive. If you are serious about buying (and in this market, you are making a great decistion) you must be prepared to act or you will not be able to make an attempt.
- If you elect to go with FHA or VA, there are other conditions that must be consider. For example, for an FHA loan on a condo, the condo development must be approved by the FHA.
So, that’s it in a nut shell. Hopefully it is clear that a pre-approval on a home loan for anyone interested in buying one of the great homes for sale in any Orange County neighborhod is the Orange County home buyers most important up-front task and one that will give them a huge advantage in this market.
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“These banks are for sure businesses and buyers have no option but to play by the banks’ rules”
The banks have done a brilliant job convincing everyone that there are rules: their-rules. Forget every thing you know. Understand that if you are a buyer you are the person with the MONEY, their paycheck comes from you.They are there to satisfy YOUR need not the other way around. You are the client (a paying client not like the one they foreclosed upon)When you get in that mind set you will command respect and you would find out very fast that the banks have bullied every one to submission. If you really understand the news and the economy you must understand that you have tremendous leverage as a buyer to let a bank (any ready to go bankrupt bank) bully you.
If they reject your offer, no big deal, there is always a new house for you to make an offer. The bank has more time to have to carry a deteriorating asset. It is just matter of attitude and the old saying “money talks bs walks”