Jeff’s Carlsbad Blog for First Time Home Buyers


FAQs – Part 1 (pre-approval)

Posted in FAQs by Jeff Dowler on October 19, 2006

First time buyers generally have lots of questions about the buying process – what happens, what can I expect, who does what, and so on. I thought it might be helpful to have a series on FAQs that buyers ask. I won’t cover everything, but try to hit the biggies. And, of course, if you have specific questions, please feel free to post them here and I will answer them in a subsequent post.

What is a pre-approval? Is this something I should do? A pre-approval is when a bank or ortgage officer reviews your financial status to determine ifyou can get approved for a loan. This is a MUST DO step for all buyers (unless you are paying cash) so you will know what you can afford to spend on a home. This is also a good time to find out if there are issues with your credit that need to be fixed before you actually apply for a loan. The mortgage person will look at your credit report and FICO scores (there are 3 major credit reporting agencies, and typically the middle of the 3 scores is used), and gather information from you regarding your assets, debts, and income, in order to determine how much you can afford based on your monthly expenses (loans & credit cards are the big things they consider, and a debt ratio that is too high will preclude you from getting a loan). They will also consider projected taxes, homeowner’s insurance, condo or HOA fees. The loan officer can issue a pre-approval letter to your Realtor and you are ready to start looking. Some buyers only get pre-qualified (where the credit is not reviewed). I wouldn’t waste your time with this, since many feel pre-quals are worthless, and any agent who is getting an offer from a buyer will request a pre-approval letter.

“Everyone hears what you say.  Friends listen to what you say.  Best friends listen to what you don’t say.” – Unknown

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5 Responses to 'FAQs – Part 1 (pre-approval)'

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  1. […] Being a good buyer means becoming as educated as possible about the home buying process, understanding local market conditions, and having realistic expectations of what your needs are relative to the amount you can afford to spend. Regardless of the amount you are planning to spend, if you are not honest about your needs and what you “must have” versus those things you are willing to trade-off, and you do not understand how the process works, you will not be effective, and will end up wasting time and becoming frustrated and disappointed.  No matter how much or how little you spend, everyone wants to feel they are paying a fair price for what they purchase in their particular market, and so it is essentianl that you get to know the local market conditions. Part of becoming a good buyer also means being serious about making a purchase when you find the right property; if you are just spending time looking at properties without the intent to buy, or having no idea of what you want and where you want to live, you are wasting a lot of time – yours, your Realtor’s, and the owners of the homes you are visiting.   […]


  2. […] local market conditions, and having realistic expectations of what your needs are compared to the amount you can afford to spend. The amount you are spending is not important – if you are not honest about your needs and you […]


  3. […] info, Financial by jdowler on the March 20th, 2007 I have emphasized, on more than one occasion, the importance of getting pre-approved before you get started on your home search. No point in wasting time looking at homes, only to find […]


  4. […] Pre-approved – This is a “must do” for you so you know what you CAN afford. Plus many sellers will not accept an offer without knowing that the buyer has been pre-approved. A […]


  5. […] have emphasized, on more than one occasion, the importance of getting pre-approved before you get started on your home search. No point in wasting time looking at homes, only to find […]


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