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One of the most important steps in the home-buying process is obtaining financing or obtaining a loan to buy a home. How to go about obtaining financing will vary depending on where in the home buying process you are.
If you are looking to buy a home in the Phoenix Real Estate Market right away, or with in the next few months, then we highly recommend you get Pre-Approved. Many buyers apply for a loan and receive approval from a lender BEFORE searching for a home.
Why is pre-approval important at the beginning of the home-buying process?
Pre-approval can cut days or even weeks off the closing, because the lender has already conducted its credit analysis and approved you for a mortgage.
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Pre-approval strengthens your offer and negotiating position. A home seller will often choose to accept an offer from a buyer who is pre-approved for a mortgage over one whose financial picture is still in question.
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Pre-approval will determine your price range and narrow your search parameters. Based on your down payment and that pre-approved mortgage amount, you will know how much you can afford before you even start looking for a house.
For Phoenix Area Home buyers who have been pre-approved, the lender has already done a credit check along with verification of employment and deposit. The lender's pre-approval is a commitment to loan the buyer up to a certain predetermined amount. The only piece missing is the lender’s appraisal of the home to confirm its value.
If you are thinking of buying in the next six months or so, then we recommend you get Pre-Qualified. There is a significant difference between buyers who are pre-qualified and those who are pre-approved.
Pre-qualified buyers are those whose lenders have determined how much they can borrow based only on information the buyer has provided to the lender and their credit report. Nothing has been verified to determine the buyer's true ability to obtain the loan. The buyer still must fill out a loan application and go through the lender's approval process. However, the importance of getting pre-qualified is that it allows you to resolve any red flags that a Lender will catch during the pre-qualification process and allow the Lender to create a game plan with you on how to obtain a loan with the best terms and rate when you are ready to buy a home in the Phoenix Arizona area.
Many people have mistakes on their credit report - either negative information that shouldn't be there or positive information that isn't. These mistakes must be corrected - but that usually takes a few months - at least. It is best to start early and getting Pre Qualified will be the first step in those corrections.
Pre-Qualification will also help you decide on the payment amount you are comfortable with, which in turn affects the price of home you can afford.
Now if you aren't thinking of buying for at least another year, and you don't want to meet with a Lender just yet to get pre-qualified, then I recommend the following. Obtain a copy of your credit report, from all 3 credit agencies, and carefully review it for mistakes. Take the steps necessary to correct those mistakes. Then when the time to buy a home comes closer - usually six to nine months before you are ready to buy - make an appointment with a lender to get pre-qualified.
We work closely with terrific lenders that we trust our family and friends with, and we would be happy to refer you to a reliable lender with low rates. Please complete the simple form below and one of our Real Estate Professionals will guide you to the best path towards Getting Pre-Approved for your home purchase in the Phoenix Real Estate Market.
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