Get Pre-Approved

What Does It Mean

Being "pre-approved" means that (i) you have provided your mortgage broker or lender some basic information about yourself and financial situation, supporting documents such as bank statements, W-2s and pay stubs and authorization to pull your credit report and (ii) that your mortgage broker or lender has reviewed your income, debt and credit situation and determined that you qualify for the loan.

What It Is Not

Pre-approval is not a guarantee that your loan will ultimately be approved. Loan approval requires much more in depth underwriting of not only you but the property as well. This will only take place when you have made an offer on a property, it is accepted, an escrow is opened and a copy of the signed purchase agreement is delivered to your mortgage broker or lender.

How it Benefits You

• It Is Required by Sellers. Most sellers today are requiring buyers to provide a pre-approval letter when submitting an offer.
• It Gives You a Competitive Advantage. In today's market, timing is everything. A pre-approval letter can give you a competitive advantage. Many buyers who are just starting their search for a home have the misconception that a "buyer's market" means that they will have their pick of the litter and will hold all the cards when making an offer. In many San Fernando Valley cities and neighborhoods, that is not the case. The buying process is highly competitive. While prices have plummeted from their high in 2006, the pool of attractive inventory is limited. Many homeowners who do not have to sell are holding on to their homes until the market picks up. When a desirable home that is well priced does come on the market, the seller will often receive multiple offers. You cannot afford to waste any time if you find a home that you like. If you are waiting to get pre-approved until you are ready to make an offer, the time spent getting pre-approved could make all the difference between you getting the home and someone else getting there first.
• It Helps You Set Realistic Search Parameters. Going through the pre-approval process will let you know if you qualify for a loan at all and if you do qualify, what your maximum loan amount is. Without that information, you could be wasting your time looking at homes that you cannot afford or missing out on some homes that could be within your means.
• It Gives You an Opportunity to Identify and Address Loan Qualification Problems Early. By going through the pre-approval process, you will learn if there are any issues or problems that need to be addressed or corrected before you can qualify for a loan or qualify for the loan type and amount that you are seeking.