I cannot stress enough the importance of getting pre-approved! If you are talking to us, you should already be in contact with a lender (but if you’re not, we can refer you to some great ones!). In the Bay Area, for example, sellers do not seriously consider an offer if it is not accompanied with a pre-approval. Take it a step farther: many buyers also provide proof of funds, showing funds are available for the down payment and closing costs.
But regardless of what’s standard in your market, why wait? Why spend four of your Sundays looking at homes, only to find out you can’t afford them? Why wait to find out, while you’re in escrow, that the home you love is beyond your budget? Once again, it saves all parties to the transaction time, money and future disappointment.
Although lenders can vary, getting pre-approved usually means filling out a loan application, and providing 1 month pay stubs, 2 years of W2’s or 1099’s, 2 months of bank & investment statements and a copy of your driver’s license. With this information in hand, lenders can complete the pre-approval in a few days, or less.
If you live in a competitive buyer’s market (i.e. the inventory is low and demand is high), we also suggest doing what’s called an underwriter’s pre-approval. This basically means being approved for a loan before you’re in escrow. Practically, it means providing a lender in advance with most of the financial information and documents they would otherwise ask for once you’re in contract. When making offers, buyers could elect to release their loan contingency and offer a fast(er) close of escrow – all appealing to sellers.
The time you take to get pre-approved now will save you tons of time and heartache once you’re ready to pull the trigger.