Getting a Loan Pre-Approval | Buyer

There was a time when getting a loan was a no-brainer, and in the Tahoe second home market we took it for granted that getting a loan for our Tahoe buyers wouldn’t be a problem.

Since the U.S. financial industry meltdown in 2008, getting a loan and being “approved”, or “pre-approved” has become a very important step in the Tahoe buying process for all Tahoe second home buyers.

Before you begin to search for the perfect Tahoe Property, it is very important to begin the home buying process by getting pre-approved for a loan if you will need one to complete your Tahoe home purchase.

The Value of a Pre-Approval Loan Letter:

Your friends and family may know you to be reliable, dependable and someone who pays bills on time, but all others in a real estate transaction will require you to prove it. That’s where pre-approval comes in.

A pre-approval letter is a more reliable form for a loan qualification than a pre-qualification letter. In the pre-approval process, a lender will examine your finances and will make a preliminary statement on the size of the loan for which you’ll qualify.

The pre-approval loan step is an involved process. The lender will take all pertinent information regarding your finances and perform an extensive check on your current financial status. This procedure will ultimately give you the exact loan amount that you will be eligible for (depending on what type of loan you decide to select.)

Getting pre-approved for a home mortgage loan will provide you with a preliminary statement on the size of loan for which you can qualify. This information will allow you to focus your home search and not miss important opportunities.

Being pre-approved lets the seller know that you have gone through an extensive financial evaluation and there should be no unexpected obstacles to buying the home.

In the Tahoe market, a seller will most likely ask to see a copy of your lenders’ pre-approval loan letter before considering your offer to purchase their home.

An offer initially submitted with a loan pre-approval letter is more likely to be taken seriously, and it will present you as a qualified buyer putting you in the best position to negotiate on price and terms.

Pre-approval Process will give you a very good indication of:

How much down payment you’ll need
Your closing costs
Your monthly payment (including PITI: principal, interest, taxes and insurance)
The type of loan for which you qualify and which best suits your needs; and,
Special programs for which you may be qualified, including those for veterans, first-time buyers, teachers, etc.

To become pre-approved you will need to provide a lender with the following:

Your employment and income history (including recent pay stubs)
Your monthly debts
The amount and source of cash available for the down payment and closing costs
Additional information as required by the individual lending institution

Pre-approval letters are not binding on the lender, and they are subject to an appraisal of the home you want to purchase and are time sensitive. If your financial situation changes, interest rates rise, or a pre-determined date passes, the lender will need to review your situation again, and recalculate your maximum mortgage amount accordingly.

The financial markets are constantly changing their lending programs, and many Tahoe second home buyers are surprised to learn that lending limits for conventional loans have dropped, jumbo loans are harder to come by, and the down payment for a second home does vary depending on the property, so while you may have talked to a lender last year, that information may no longer be current.

It is important to talk to a lender with in the last 30 days if you are shopping for a new Tahoe home.

You can research lenders yourself and ask them to pre-approve you, or you can ask me for a list of lenders that are providing loans to Tahoe second home buyers. Either way, you need to be pre-approved before you begin your Tahoe buying process, and your pre-approval needs to be a recent approval.