Protecting Your Pre-Approval During Your Home Search

Getting pre-approved by a mortgage lender should be the first step in your search for a new home. While it may be tempting to just start looking at homes, getting pre-approved will show your realtor and sellers that you are a qualified and serious buyer. It can save you time by helping you to focus on properties in your correct price range.

The pre-approval process is a review of your financial background. You’ll need to allow your lender to run a credit report and supply the lender with documents such as pay stubs, tax returns, proof of assets and accurate information on any outstanding debt. From this, you will receive a letter with the mortgage amount for which you have been pre-approved. This letter means you’ve found a lender who is confident in your ability to make the necessary down payment, as well as stay on top of your monthly payments going forward. Now you can shop with confidence.

Keep in mind that a lender is only showing you what you’re qualified to borrow. It’s up to you to decide what loan amount and monthly payment you’ll be comfortable with.

Once you have your letter which is typically valid for 60-90 days, there are steps to take to protect your pre-approval while you search for your new home.

• Make sure you stay current on your existing accounts.Continue to use them as you would normally, because any change in your pattern of use will raise red flags.
• Do not apply for new credit.Each time your credit is checked, you lose a few points from your credit score. The better your credit score, the better your interest rate and the less money you could spend over the life of your loan.
• Don’t max out your credit cards.Do not exceed more than 30% of your available credit during the loan process, and if you pay down balances, do it across the board.
• Don’t consolidate your debt.Your credit score will suffer if you appear to be maxed out on one or two cards.
• Don’t close credit card accounts.This will have a negative impact on your credit history.
• Don’t transfer money between accounts.
• Don’t withdraw or deposit large sums of money into your checking or savings accounts.
• Don’t make career moves.The lender needs to know that you are going to be capable of paying the mortgage, and will look closely at your employment history and income.
• Properly document gifts.If you are receiving a gift of cash towards a downpayment, make sure you ask your lender about properly documenting and depositing this gift money so that it can be counted toward your purchase.

If you have questions about the pre-approval process please do not hesitate to contact us. We work with a number of great lenders who will be able to assist you with financing and answer any technical questions and we would be happy to refer you.

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The Allison Ziefert Real Estate Group is a top producing real estate group based at Keller Williams Mid-Town Direct in Maplewood, NJ. Allison Ziefert, a local market expert, specializes in Maplewood, South Orange, Millburn/Short Hills and West Orange, NJ real estate and homes, and the surrounding towns. Allison’s success as a Maplewood/South Orange realtor is driven by earning great testimonials from sellers and buyers of homes in her marketplace. You can read her testimonials at www.azhomesnj.com/testimonials.