Qualifying for a Loan


The market continues to be good for buyers. Home prices are low (but starting to climb), and rates remain incredibly low compared to historic norms. While there’s not a lot on the market, spring and summer are traditionally times when more inventory becomes available, so we may see an upswing in houses listed for sale.

However, while it may be a buyer’s market as far as housing prices and rates, there’s not much for sale so seller’s can be choosy. How can you be the buyer that gets the home you want? One of the best ways is to demonstrate that you’re qualified to buy that home.

There are basically two levels of loan qualification – “pre-qualified” and “pre-approved.” Pre-qualified consists of sitting down with a Real Estate agent and doing some simple calculations. Getting pre-qualified allows you to figure out what you can afford so you can narrow your search. An agent will ask you about your income and how much debt you carry (car payments, insurance payments, tuition payments, etc.), and whether you have any savings for a down payment. Being pre-qualified is much better then not being pre-qualified, but it’s not as good as being pre-approved.

To become “pre-approved” for a loan is more involved, but it’s a GREAT way to increase the chances of getting the property you want. Becoming pre-approved means working with your agent to find a loan broker who will review all your assets, liabilities, tax returns, W-2s, credit history, and any other relevant financial information to begin the process of applying for a loan. Basically, the only difference between being pre-approved and applying for a loan is that when you’re pre-approved, you haven’t found your property yet.

Getting pre-approved increases the chances of having your offer accepted, and it puts you ahead of your competition, if you have any. Because loans are so much more difficult to get than they used to be, a buyer who is pre-approved gives sellers piece of mind. Sellers won’t have to go through the frustrating experience of starting an escrow, only to have it fall through because the buyer can’t get a loan.

So how do you get pre-approved? Work with your agent to find a local loan broker. In this case, local matters. The incentive to provide excellent service and solid results is greater when your loan broker knows he may run into you in town. But that’s not the only reason local loan brokers are better than, say, someone on the Internet.

Internet brokers are playing a numbers game. If it takes months to find a type of loan that you may qualify for, that’s fine with them. They have hundreds, maybe thousands, of customers and so there’s no great rush to get you what you need.

Loan brokers who work in Ukiah only have the local population to work with, so it’s not efficient for them to throw a bunch of spaghetti at the wall to see what sticks. Basically, they make a living by being efficient and doing their homework so they can find you the best loan as quickly as possible. It takes more work up front, but it pays off for them and it pays off for you. Once they’ve found a loan that will work, the next incredibly compelling reason to find a local loan broker is so you can take advantage of their business relationships. Local brokers know people with whom they can work, people like title officers, escrow officers, pest and fungus inspectors, and insurance agents.

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