Had a reader comment on my last post about getting pre-approved:
What’s your opinion on the preapproval/approval process? I wish you could get officially approved before putting in an offer, it would save so much stress I think. Seems like a very backwards system.
I did get pre-approved. There are two things you can do. You can get pre-qualified, which means you tell a lender your info — aproximate income, the debts you have, the amount of money you want to borrow. They are taking your word on all of this information and aren’t fact-checking anything.
They will tell you if they think you will probably be able to get the loan you are seeking, or probably not. It’s nothing binding, but it’s something you can use when you are in the very early stages of buying a house to help get an idea of what you want to spend and what the bank will lend you.
The pre-approval is much more involved. The lender will have you submit a variety of documents — bank statements, pay stubs, tax records, retirement accounts, etc. They pull your credit. They verify all of the information to see if you really can afford (in their mind) the amount of money you want to borrow.
The bank can then issue a pre-approval letter that you can use to attach to your home offer. Ours had an amount on it, but our realtor used white out to cover the dollar figure up. She said it was just important that the sellers knew we had been approved in general, and that we probably would be able to afford that particular house.
For situations where multiple offers are received at once (like how ours went), the pre-approval letter can give that buyer an edge over another offer without a letter.
So maybe the reader got pre-qualified instead of pre-approved, and that’s why they are running into issues?
Next up, some of you have cautioned me to read the home owners association covenants very closely. I’m working on it.
So far, this neighborhood seems to be pretty reasonable. Some neighborhoods I’ve seen have crazy restrictions and it’s over the top. I think we’ll be ok with these provisions.
I don’t know if there are any newer neighborhoods around here that don’t have a HOA. Even some of the sorta older ones do. Oh well.
We have our inspection scheduled for Saturday. Hope any problems make themselves known…and hopefully there’s nothing majorly wrong with it.
The current owners are relocating for work, and there’s a relocation company involved. Apparently now the relocation company is the new seller. I guess they bought the current owners out? I’m not really sure what their arrangement is, but we’re having to sign a rider from the relocation company and agree to their terms. If the relo company now owns the property, maybe they will have more room to negotiate any types of repairs that could be needed.
The closing date is set for Sept. 2. That’s not too far from now!