Pre-Approval Mortgage

Real Estate in Western Massachusetts. Real Estate Consulting for Real Estate in Western Massachusetts. Advice on How to Sell, Mortgages, Finance, Real Estate News, Community Links and more. Homes for Sale in Western Masshusetts. Homes, Farms and Horse Properties, Land and Commercial Sales in Western Massachusetts; Springfield, Amherst, Agawam, Chicopee, Longmeadow, Amherst, Westfield, Palmer, Ware, Berkshire, Hampden and Hampshire Counties. Free listings" For Sale By Owner's", Western Masschusetts properties: Home, Land, Farm, Horse Propeties.

Pre-Approval Mortgage

Pre-approval Mortgages

by Adam Graber

Mortgage Loan Officer

Advantages to Pre-approval

Pre-approval will determine the maximum you can spend on a house before you shop, so you know what price range to target. Many shoppers aim too high, bidding on a home that they later learn is beyond their means because of unforeseen debts or other financial factors.

A pre-approved loan is the equivalent of a cash offer. Sellers are more likely to accept such a secure bid over other, simultaneous bids for which financing is still pending -- even if those bids are higher.

The contract you sign upon submission of your bid allows a finite period in which to find a mortgage -- typically 30 days or less. If you fail to secure financing within that period, the seller may drop your bid. In the meantime, another buyer may offer the seller a higher bid -- or even a lower one -- and bump you out of the picture. Some contracts allow the seller to find a mortgage for you if you miss the deadline, possibly with no consideration of the terms and how they affect you. Pre-approved buyers can rush the closing if the seller is in a hurry to deal. Pre-approval gives buyers bargaining power.

Approval vs. Qualification

Know the difference between pre-approval and prequalification. Some loan officers and mortgage brokers pre-qualify applicants based on a cursory check, never going through the full appraisal necessary to guarantee a loan. Without written certification, it's not a true pre-approval and it carries no weight. In a true pre-approval, the lender will present you with a letter, certificate or wallet-size card bearing your name and the maximum loan amount. It proves that an underwriter has completed all the checks and guaranteed your loan.

Many lenders pre-approve applicants, mostly because it lessens the chance that the buyers will look to other lenders once they find a house. Pre-approval, however, does not preclude shoppers from changing prospective lenders at any time.

How Long Does It Take?

The length of the pre-approval process varies, depending on the lender and applicant. Some banks can complete it in one day. Lenders that promise 20-minute pre-approval usually take that amount of time to gather and discuss the applicant's information, but the approval is still pending a review of the filer's resources, income and debt. Some lenders perform these checks over the phone