The first and obvious question is, What Is A Preapproval?  A preapproval basically means that I believe you can buy a home that is priced up to a certain amount.  The preapproval is based on your credit report and the information you have provided so far.  Your loan officer may not have all your information, and some of the information you provided may be wrong, so a preapproval is not a guarantee that your loan will actually end up being approved.  But a good loan officer can ask the right questions and be pretty sure how much you can afford. 

The preapproval is your ticket to start shopping for a home.  So, start shopping.  But while you’re doing that, you’ll be asked to provide proof that your application is correct and complete.  So, watch your email for lists of items needed for your file and paperwork for you to sign.  The sooner you complete your tasks, the sooner your loan officer can know for sure that the preapproval is justified.

Once your items are provided, they will be reviewed by the loan officer and the processing team.  The processing team will do the behind-the-scenes verification stuff just to make extra sure we’re ready to go.  Your loan team doesn’t need to wait for you to find a property to do all this verification.  But once you find your property, the underwriter is the ultimate judge of your file, and your loan team will want a nice complete file before going to underwriting. Don’t delay doing your part and getting your items submitted because once you have a home under contract, strict deadlines start to apply. That means your file needs to get submitted to underwriting quickly at that point, and a file with too many missing items will give a bad first impression to the underwriter and make your file tougher.  Once the underwriter is satisfied that your file is worthy and the appraisal comes in good, you’re ready to close.  Getting things in order sooner allows your file to be ready to close sooner and takes much of the stress out of the process for you.

Since the current market is so competitive, it’s nice when you can tell potential sellers that your credit application is complete and it’s ready to go to underwriting right away.  That is much stronger than just having a preapproval letter – and listing agents do call loan officers all the time when they are considering your offer.  I don’t blame them because frankly, many preapproval letters aren’t worth much when they are done by lenders who don’t know what they are doing – and there are a lot of lenders who don’t know what they are doing.  I used to be a lender who didn’t know what I was doing too!

Many years ago, my first boss told me, “Just tell them they are approved!  Hopefully you can get the loan done and get paid.  But if you can’t, you just deny them and move on.”  That’s really how he operated.  Sad, but true.  I prefer to make sure you’re good to go before you find a home! 

There are a lot of shoppers trying to buy the same home that you are looking at.  Anything you can do to make your offer stronger you should to do.  So, get your documents in quick and you can be confident your loan will actually get approved and close!