Mark Wozniak: Hi I’m Mark Wozniak.
Leigh Anne Monk: And I’m Leigh Anne Monk. And we are the Equity Rise Real Estate Group.
Mark Wozniak: And welcome to our series on the home buying process. This can really be such an enjoyable and exciting process and it really begins when you, as the purchaser, have made your decision that you’d like to buy a home. It can be for a variety of reasons, such as the lifestyle and flexibility that homeownership affords or maybe it’s the amazing financial benefits of owning a home or just even the pride of having a place to call your own. Once that decision's been made to move forward they’re really two initial steps and one of them, which we are going to talk about in this segment, is the pre-approval process with the lender. Another step that happens in parallel with that is hiring your buyer agent to work with. So first off, let’s talk about the pre-approval process.
Leigh Anne Monk: Great, Mark. The first thing I’d like to just share with everyone is not only is this important, but it’s actually relatively easy. It is pretty painless. Most lenders have online applications now that you can simply go in and give them some basic information and the idea is when you give them your income, your debt, your assets, they come back to you and say, "Here’s how much you can afford."
So the very first reason that we strongly recommend that you get preapproved with a lender is to understand that proper price range to look in. There’s nothing worse than finding your dream home only to find out you can’t afford it. At the same time and I recently had a client, Mark, as you know, that thought they could afford a certain amount and when they went to their lender the good news was they could actually afford 25% more than they originally thought due to low interest rates that are available today.
Mark Wozniak: Right. So not only is it a pretty simple and painless process it can have some wonderful surprises as well.
Leigh Anne Monk: Exactly, exactly. And in the case of these folks, they got to buy a larger house, with a couple of nicer amenities because of that new additional price. The second reason you need to get preapproved with the lender is that you really need to be seen as a serious buyer for the sellers as you present offers as well as the other agents.
Here is what happens: When you actually make that offer to purchase a home, you found the home, you are ready to go, part of that approval package that you send over to the seller does not just include the contract but also includes a pre-approval letter from your lender. That indicates to the seller that it is, that you are a buyer that has the means to buy that house because for them to take it off the market and say that house is under contract, they need to have that confidence. So it makes an incredible difference to have that pre-approval letter.
Now another thing is if you don’t get it and I’ve had this happen sometime, I had a buyer one time that just hadn’t gotten around to it and we showed him and we got ready to put an offer on a house and guess what? Someone else put an offer on the house that same weekend. Because they didn’t have their letter, we didn’t have a complete package. There is nothing worse than that and you can so easily avoid it just by getting that pre-approval done first.
Mark Wozniak: Yeah an analogy I often like to make is that it’s like showing up at the airport wanting to take an international flight without your passport. You just can’t do it. You’re going to be stuck at the counter with no way to get on that plane and all the other passengers are on there. It really is your initial entry pass, your ticket to this whole home ownership process. You can’t take it lightly and you can’t put it off, but again though it’s really not a complicated process it’s not hard and it doesn’t take a long time.
Leigh Anne Monk: Right and one thing that we like to offer our clients is that we work with lenders all the time in this profession and so if you don’t have a lender that you know feel free to contact us and we will be happy to recommend some. These are lenders that we have worked with in the past that have helped our clients through issues.
You know another thing you might want to think about too is sometimes when a lender looks at your credit report, for example, they may find something that needs to be fixed and repaired. Sometimes it’s as simple as a mistake that one of the credit bureaus made that when you contact them it can be removed from your credit score. All of a sudden your credit score goes up and that is super important because that helps you lower your interest rate. The higher the credit score the better the interest rate you are going to get from that lender. So it’s a really, really good idea to perhaps even get pre-approved prior, way prior, because if you have an issue with the credit then guess what? The good news is you are going to be able to get that fixed. So when you are ready to buy that home there are no issues on your credit score and you get that pre-approval.
Mark Wozniak: Right. So that’s our discussion on getting pre-approved with the lender. Again, there is a parallel process that we’ll talk about in another segment which is finding your buyer agent to work with. Thank you.