One of the most important steps in the Phoenix home buying process is receiving pre-approval for a home loan. Many buyers apply for a loan and obtain approval before they find the home they want to buy. Why? The pre-approval step takes only a few hours and will save you a tremendous amount of time looking at homes that may be below what you qualify for or above what you can qualify for. Taking this step also affords you the opportunity to get to know your lender and the process he or she will take to assist you in your home purchase. To get the process started, I have added numerous loan calculators to my web site. Just plug in some simple information and you can get a snap shot of what you qualify for.
When purchasing a home in Arizona there are a variety of loan programs that are available. These different loan programs offer different rates, terms, and down payments. Many loan programs require no money down. Many individuals do not own a home simply because they don't know how easy it can be. Often times you can own a home for less than you pay in rent.
Pre-qualifying will help you in the following ways: Generally, interest rates are locked in for a set period of time. You will know in advance exactly what your payments will be on offers you choose to make and you won’t waste time considering homes you cannot afford. Pre-approval will help you in the following ways: A seller may choose to make concessions if they know that your financing is secured and you can select the best loan package without being under pressure.
Sometimes similar sounding terms can have vastly different meanings. For instance, the difference between buyers who are pre-qualified and those who are pre-approved can make a huge difference in the length of time it may take your home sale to close.
A buyer who is pre-qualified is one whose lender has determined how much he/she can borrow based only on information they have provided to the lender. Nothing has been verified to determine the buyer's true creditworthiness. The buyer must fill out a loan application and go through the lender's approval process at a later date.
When a buyer has been pre-approved, the lender has already done a credit check and verification of employment and deposit. The lender's pre-approval is actually a commitment to loan the buyer up to a certain pre-determined amount. The only thing missing is the lender's appraisal of your home to confirm its value. When seeking a pre-approval, it's important to not misrepresent the facts on your application. If a lender learns later that you've misrepresented or omitted information on your application, your pre-approval may be rescinded.
An offer from a pre-approved buyer can save days or even weeks off the closing process. In Arizona a purchase contract must be accompanied by a Loan Status Report which states at which stage of the loan process the buyer is currently.
Please keep this in mind when you are ready to make your next home purchase. There is really never a good reason not to represented by a licensed Realtor®. Copyright 2004-2006. Tracy Thompson is a member of the National Association of Realtors®, The Arizona Association of Realtors® and the Glendale Board of Realtors®. To find out more about home buying and selling, contact Tracy at 623-326-0597 or email Tracy@TalkToTracyHomes.com. Sign up for Tracy’s free weekly newsletter at www.TalkToTracyHomes.com/newsletter
Thursday, March 16, 2006
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