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Pre-Approval for Your Dream Home - Ladue News: Special Features

Pre-Approval for Your Dream Home

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Posted: Thursday, March 1, 2012 11:04 am

Before you start frequenting open houses in your quest to find your dream home, the loan pre-approval process is an important first step. “One of first things you need to do is to get pre-approved, especially in this marketplace,” says Deanna Daughhetee of American Equity Mortgage. “It’s important to know that you can qualify for a mortgage and the amount of the mortgage you can qualify for, so when you’re out shopping with your realtor, you know exactly what you can afford, especially with the stringent credit requirements right now.”

Daughhetee recommends working with a mortgage expert to be pre-approved and also suggests organizing all your materials prior to starting the process. “There are three basic categories: your income, your credit, and your assets and down payment. When you take the time to put everything together, it makes the process go so much faster.”

According to Doug Schukar of USA Mortgage, the secret of the game lies with the relationships between the real estate agent, the borrower and the loan officer. “That’s the key to success: That team has got to be operating on full cylinder, and normally it does,” he says. “I don’t believe that the industry can tell you better what you qualify for than you can tell yourself. So the next questions that you should ask: What amount do I feel comfortable with? Where do I feel comfortable with my payment? The consumer knows that almost right away.”

And with rates remaining low, Schukar points out that the consumer’s comfort zone is usually lower than what they qualify for, as borrowers are qualifying for a lot more. “But I think it’s still important for buyers to identify that comfort zone because I don’t want to tell the agent that you qualify for a $200,000 house when you really only want payments that support a $100,000 house,” he explains. “If the agent shows you a $200,000 house, you’re going to like that one better because $200,000 houses are a lot nicer than $100,000 houses, and there’s no sense in building that emotion up if the buyer doesn’t have the desire to be that paymentstrapped. Part of this is creating that realistic expectation of what you should be looking for.”

It also is important for buyers to understand that a pre-approval does not bind you to a lender, notes Ken Neiman of Stifel Bank & Trust. “The preapproval process doesn’t officially end the process because there has to be an appraisal,” Neiman says. “The process also allows the consumer the opportunity to find out what their problems might be. Most of the time, buyers find out after they have fallen in love with house and before they close, and we’re seeing an extraordinarily high fail rate in mortgage applications. A great portion of that is due to the heightened guidelines, but an even greater portion is people who don’t go through the process of figuring out what they can afford beforehand.”

Another important aspect of a pre-approval is that it helps when closing a deal. “It makes a big difference because they then know that the buyer is really going to be able to close,” Daughhetee notes. “It gives you a lot more negotiating power and you’re more apt to get the house that you want.”

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