Buyers – Why you want to be pre-approved for your loan

There is the fast and furious approach: Pre-Qualification
In a fifteen minute telephone conversation with a local lender, that lender can tell you – based on the information you have provided – how much you can comfortably afford to pay for a home.

This provides you with some undocumented information which can be used by me as a guideline as to the price range in which we would look for your new home.

Pre-Qualified Letter
This letter is often given to home buyers to use in support of their offer to purchase a home. In reality, if you have only been pre-qualified, those people “in the know understand you will still have to be pre-approved for them to know if, in reality, you can purchase the home.

The Pre-Approval process: The “Real Deal”
To be actually pre approved for a loan, the lender will run a credit check, verify employment, income and expenses and other tasks related to the analysis of qualifying and approval of you as a buyer. Part of the process is to determine how much you can afford to pay for a home. Your lender will provide you with a pre-approved letter stating a maximum.

Pre-Approval Letter
Once you have a letter of pre-approval, those in the know understand you are a verified buyer willing and able to purchase the home. This is a letter with teeth in it; and it is definitely helpful to have this with your offer to purchase.

This pre-approval letter gives your offer more strength, more credibility. It can separate you from other buyer who are not as well prepared.

Understanding the difference / the process
Until you go through the loan pre-qualification process, you cannot really know how much you can truly, comfortably afford to pay for a home.

I recommend you develop a strong relationship with a local Realtor (me) and with a local lender (local to the area where you plan to purchase a home. I can provide lender options for you to call if you do not have an established relationship with a lender).

Tax Benefits to you. Part of the analysis of how much your monthly outgo will be
When computing your comfort level for your mortgage payment, you will want to adjust the amount deducted for income tax withholding to account for the new mortgage interest tax deduction.
Your lender and your CPA can assist you through this analysis.