It is essential that all of our clients be pre-approved by a lender for a Kentucky mortgage prior to looking at properties and making an offer on a home. This is for your protection. There is nothing more disappointing than finding a home that you love only to discover that you can't obtain financing! The pre-approval process is very simple and requires paying for a full credit report. You can expect to pay approximately $50.00 per married couple or $50.00 each for individuals who will be applying for a home loan. The loan officer will need your Social Security number, last 2 pay stubs, last 2 bank statements, last 2 years employment information, last 2 years W-2's (possibly), and last two years income tax returns (possibly). (Requirements will vary from lender to lender) The following article will be of interest to you regarding this subject:
Should I Shop For A Loan Before I Begin House Hunting?
Yes, Yes, and again, Yes! Knowing where you stand concerning how much money a lender will lend you (based on your income and credit rating) puts you in a strong bargaining position. As Realtors®, we have been faced with many multiple offer situations in the current real estate market. We have many different buyers all looking for a similar type of property, therefore, when a desirable property comes on the market, the reaction is often swift and decisive. Don't set yourself up for disappointment - get pre-approved. Sellers faced with deciding between two buyers - one who is pre-approved by a lender and one who is not- may favor the pre-approved buyer.
Pre-approval vs. Pre-qualifying
A pre-approval is obtained when a prospective buyer pays for a credit report and supplies the lender with necessary documentation to determine employment and income/debt ratio. Upon pre-approval, the lender is able to give the buyer and their Realtor® a letter verifying a pre-approved loan amount and any other stipulations needed to obtain the loan. Other stipulations may be that the buyer must sell their existing property, or pay off a debt, or subject to an accepted Offer To Purchase contract, or subject to appraisal. This should all be detailed in the letter.
You can be pre-qualified by simply giving the lender information via the telephone or the Internet*. The lender will generally give you a loan amount based on the information you have given them. This is all subject to verification and therefore is not worth much in the seller's eyes. Be a prepared buyer - take the time and effort to get pre-approved!
*Note - We all love the Internet, but be careful when obtaining pre-approval from a company on-line. I recommend you also speak to someone in the local area as well in order to compare fees, interest rates, etc.