Why Do I Need A Preapproval?
It is VERY important that you are preapproved for a loan before you begin searching for the right home. A preapproval letter is really just a lender's determination of how much money you will be able to borrow.
You need to know what price range you can afford. There are 818 homes currently for sale in Jefferson Parish ranging in price from $43,000 to $16,895,000. Now imagine you find what you want for $300,000 with $5,000 down payment. According to an online mortgage calculator you see that it will be $1,780.82 a month and you know you make 4 times that a month so you go off of that figure. You've never been preapproved but you have an ok credit score...you go to get your preapproval done and find that you actually only make $4,000 a month the other $2,000 are tips that you don't claim. At this point you get prequalified for $200,0000. Looking at $200,000 homes vs the $300,000 homes are quite a difference. What it all comes down to is that each person's situation is unique. The mortgage calculators may take the best case situation to give you the figures.
When you find a home that you love, you want to be able to act quickly. When you find a home that you see yourself in you can put in an offer ASAP. You won't have to wait for a lender to call you back and start looking over your paperwork to start the process. Sometimes it can take 2-3 days to get everything to your lender. Sometimes you have to speak to someone in your Human Resources for documents needed for preapproval.
Sellers are more likely to accept your offer when it's accompanied with a preapproval letter. Some sellers won't even look at your offer if it doesn't have a pre approval letter. Let's pretend for a moment that you are the seller. You need to sell your home in 3 weeks. The first thing you do is call your Realtor® and tell them is that you need to sell your home NOW! You list your home below market value because you need it sold like yesterday. The first day you end up with two offers. The first offer is for cash and it's $2,000 less than your list price. The second is full asking price because they WANT that house. The second offer has not been preapproved. You as the seller don't know if they can qualify. Their own agent doesn't even know if they can qualify! Knowing that you have to be out of your house in 3 weeks which offer do you take? Is the risk of taking your home off of the market for an extra $2,000 worth it?
When you are preapproved for financing, you become the cash buyer. Can you now see the benefit of it? So, now that you know the benefit.... when is the best time for me to call or email you a list of lenders?
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