There are advantages to you in getting pre-approved for your mortgage. Primarily, with a pre-approval you should receive a "Good Faith Estimate" from the lender.

So what good is that? A good faith estimate will tell you exactly what to expect from your loan. The first item is the loan amount. You may want a $200,000 mortgage, but the lender may not approve you for that. You may be approved for a $500,000 mortgage but you may not want to borrow that much. The GFE (Good Faith Estimate) will include the amount of loan you have discussed with the lender, not necessarily the maximum amount for which you would qualify, but for the loan amount with which you and the lender are comfortable. It really is senseless to begin looking for a house until you know exactly how much money has been approved.

An excuse from borrowers on loan defaults is they did not know the terms of the loan. If you are dealing with a legitimate lender, you will know the terms of the loan. The GFE will tell you the length of the loan, usually 15 or 30 year terms. Most mortgages are for 30 years because the longer time frame makes for lower payments.

The GFE will also give you, in precise detail, the interest rate terms for the loan.

There is a plethora of  loans available, be sure to consult your Realtor and loan officer on the best for your situation. I will mention a couple of loan types here. In my opinion, under MOST circumstances, the optimum loan is usually for a fixed percentage rate. A fixed percentage rate will not change, even if the loan is sold.  Another type of loan I will mention here is the ARM (Adjustable Rate Mortgage.) These loans can be quite beneficial under certain circumstances because they usually have the lowest interest rate, but the rate can change. The details are in the GFE. One of the occasions this type of loan could be useful is when you know, beyond the shadow of any doubt, that you will only need the loan for a very short amount of time, 2 or 3 years. After that, the rate adjusts and you could find yourself in trouble with the new calculated payment.

Another advantage to pre-approval is you will learn the costs of obtaining your mortgage.

The GFE will tell you how much down payment is required for your loan. This amount will vary with the type of loan and other requirements for your situation. There are also other closing costs involved with obtaining the loan. Will the lender be charging an "origination fee?" These costs are detailed in the GFE. Have you enough cash on hand to cover these costs?

The GFE will give you the exact terms of the loan, removing all doubts about the loan, unless you simply choose to ignore the facts, as is the case with most defaults.

So, you really should consider the pre-qualification mandatory for yourself. With the GFE you will know if you really are ready to look for a house. It is extremely disturbing to find the house you love and then learn you can't buy it. Therefore, with pre-qualification you have saved yourself a lot of time and heartache.

Since the purpose of the pre-approval is only one part of getting you into that home you want.

There are other factors involved. I recommend you start the whole process of house hunting by choosing your Realtor first. We are a decided benefit to you due to our training and knowledge. A professional Realtor will be able to coach you from start to finish, including  your loan needs and recommendations of legitimate lenders. If you are in the Tulsa area, contact me, I would be honored to work with you. If you are not in the Tulsa area, contact me and I will find a professional Realtor in your area through my extensive, world-wide network.

As your real estate consultant, part of my job is to prepare you for potential issues.

The pre-approval process is not necessarily an easy one. You will be required to give the lender a lot of details about your finances. You will also be filling out a lot of papers. I want you to know this can be a frustrating part of the home buying process. The good news is, when you get the information to the lender, the entire process can be completed quickly. Timely action will make your pre-approval easier for you, and once it is done right, it is done. I have a checklist of items the lender will want. If you would like a copy, just ask.

It may help you to know the
Items Needed For A Loan Pre-Approval:
Copy of  Driver’s License
Copy of Social Security Card
Pay stubs covering the last 30 days
W-2’s from all jobs from the last two (2) years.
Tax Returns complete with all pages and all schedules for the last three (3) years.
Bank statements from all accounts for the last two months. Original copies work best, complete with all numbered pages.
All deposits on your bank statements must be sourced with copies of checks deposited to show money deposited was not a loan. 

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