Sound OffLenka Hladikova Why should buyers work with a lender before starting to search?
I often meet with frustrated buyers who claim they did everything they could to get an offer accepted on the home they wanted, only to find out later that they went into negotiations without being pre-approved or even pre-qualified for a loan. Buyers need to know having some level of verification from a lender is crucial when bidding on a property and getting it can save a lot of time and frustration.
There are three levels of verification of funds lenders typically issue, and it’s important to know the difference between them.
The simplest one to obtain is to have your lender pre-qualify you for a loan. In obtaining this pre-qualification letter, lenders typically require just a brief conversation with the buyer and in many cases, credit isn’t pulled. While it’s the easiest to get, I don’t recommend it as most sellers are looking for a more thorough verification of a buyer’s credit and their income and assets.
A more significant verification of funds is when you become pre-approved for a loan. This is typically issued after an applicant’s credit gets pulled and some of their income and assets get verified. The pre-approval can still usually be obtained in one day.
The highest level of verification, and the one I encourage all my buyers to get, is a conditional approval for a loan. With the conditional approval, you deal directly with the underwriter, the ultimate decision maker. They will review and verify all financials before issuing a full loan approval. In most cases, this is only “conditional” upon obtaining a clean title search, an appraisal and the obtaining of insurance. The conditional approval gives you a decided edge over the competition and puts you neck-and-neck with cash buyers.
There are lenders out there who can get a full conditional approval within 24 to 48 hours, and after obtaining one, you can often close within 15 days.
While it takes some time and pre-planning, rest assured that obtaining the right verification from your lender will help you get ahead of the pack when bidding for a home.
(203) 273-3771, LHladikova@Halstead.com