The Importance of Preapproval

The Importance of Preapproval

The preapproval process can be a difference maker when making offers in a highly competitive housing market. As a result, it’s essential to have your finances squared away before you’re ready to make offers. Remember, despite ever-increasing competition, only one contestant can win the beauty contest. Here’s how to make sure your credit is ready for its close up.

1.     Prepare to be scrutinized. Lenders look at different criteria than other institutions. We’re not like Credit Karma or a car dealership. We use the strictest formula. We use a true FICO that is a median score between Experion, Transunion, and Equifax. We will pull your credit report, look at the score, and analyze debt ratios to establish your purchasing power.

2.     Don’t go rogue. It’s a mistake to try to manipulate your credit by paying down bills without talking to myself or another mortgage professional first. From time to time, we have ways to boost credit scores to the next tier, but for you to receive the best rates and lowest payments, we need to work together. Doing things organically on your own is much slower and far less useful than allowing me to use my resources to do my job.

3.     Not all lenders are created equal. Not all lenders are the same. There are bankers, brokers, retailers, wholesalers, and more. I try to be the best of all worlds. I’m a bank and a broker, which gives me the ability to address a wide variety of scenarios with all kinds of different products.

4.     The type of property matters. Condos, single-family homes…different kinds of properties can require different kind of financing. You may think you’re comparing apples to apples in terms of price, rate and payment, but those things can change depending on the property. Talk to me about the different types of properties you’re interested in. Bring addresses for those properties, so we can have your finances set for all possible circumstances.

The internet would have us believe we’re all created equally and that buying a home is just as easy as buying a pair of Nikes on Amazon. It’s not. More than likely, if you’re buying in the San Francisco Bay Area, it’s a million-dollar asset. Give the preapproval process the time and respect that it’s due.