If you are currently looking around at real estate here in Santa Barbara, including Goleta, Hope Ranch, Montecito and Carpinteria, you are going to be asked at some point to show that you have been “pre-approved” for a mortgage. The importance of this letter from your lender jumps significantly if you are looking at bank-owned properties as well as anything that will be considered a “deal”.
Lender's Pre-Approval Letter
The reason is simply that it is normal to present this letter with any type of offer to purchase a property.
If you are also competing with others on a property and you do not have this letter in hand…this is one strike against you and that is often all that is needed to NOT get your offer accepted.
1. What Is A Pre-Approval Letter And Why Is It Important To Me?
In real estate lingo, being “pre-approved” simply means that you have a commitment in writing from a lender to lend you a specific amount of $$ to buy a home under certain conditions (e.g., length of the loan and interest rate). A pre-approval in today’s market is simply a must to have with all our recent history of lending. Sellers will simply not look at your offer without this letter in your hand and presented with the offer. Sellers will not choose a buyer who seems to be a “quality” buyer, but can’t come up with the funds to buy the house (thus presenting a letter from a lender).
2. How Do You Get Pre-Approved?
You should end up talking to a few lenders to search out different loans that will best suit you and your personal financial situation. Often family or your Realtor can suggest a lender to talk with. The lenders will require certain information such as: your income, your employment history, and any debts you may have — e.g., student loans, car loans and credit card debt.
Other items that you might be asked to show are your tax returns, bank statements and W2 forms. The lender(s) will also check your credit report and whether you have funds for the down payment and closing costs.
