With all of the mortgage options available to home buyers today what is the value of prequalifying for a home mortgage? Simply put it shows that you are a qualified buyer. What is important, is that you obtain an actual fully underwritten approval and not one of those five minute computer generated online preapprovals. An actual fully underwritten approval indicates that all of your documentation has been reviewed and you are good to go. So what is the process? MN Capital has a simple breakdown on their website, click here to view. The process is a bit different than in years past and I have outlined the process today in earlier postings.
Now that you have your preapproval and you begin making stronger purchase offers than a buyer that is not prequalied. Do not get discouraged if you encounter properties with agents that want you to get prequalified with their Lender before they will accept your offer. Frankly this is a complete waste of time and can, in some cases, hurt your current loan approval as multiple credit inquires will bring down your credit score. A fully underwritten approval should eliminate this requirement but some listing agents will require this step. Sadly, in most cases, the listing or sellers agent is trying to steer you, the buyer, to a loan officer that will offer some sort of incentive to the listing agent for sending you to them or aka kickback. I have been told myself from several agents if I send them a little something-something then they will send me their buyers. Needless to say I will not work with these agents.
Home builders also get in on this act. They disguise there actions with phrases with “Builders Preferred Lender” and offer buyer incentives for using the Builders Lender. Do not kid yourself as if you are getting an incentive on the purchase then you are not getting a deal on the loan, you do not get something for nothing. Those of you that know me know that I do development financing and can help maximize any builder’s profits. There are many ways a builder can improve their bottom line without jamming any buyer by forcing them to use their “Preferred Lender” as, in most cases, the same sort of something-something is going on.
So what can you do about this? Well simply put you can get a fully underwriting preapproval before you even begin to look at homes. Both listing agents and builders will not mess around with running you, the buyer, through their systems, for lack of a better phrase, if they can smell a payday. A preapproval protects you and shows sellers that you are serious.
When it comes to your preapproval you should not have to pay for anything to obtain a fully underwritten preapproval. Work with reputable Mortgage Lenders and for the most part all companies in the business today will take your best interest. Those that do not are easy to spot as they will ask for upfront fees for rate locks, credit reports, application and so on. They will tell you that this money will be credited to your closing cost and/or appraisal. This is a trick to get you, the borrower, invested into the deal so you are less likely to shop the rate afford. So you are considered to be aka “Off The Street” in terms of how your file is viewed. With that said do you think you will get the best deal available to you?
When mortgage shopping do not let your credit get ran until you have reduced your Mortgage Lenders to three or less, do not pay upfront fees and get your rate lock in writing. You will need to pay for your appraisal but not until after you receive your loan approval as this fee is not refundable. Following these step will point you in the right direction when dealing with the mortgage process.