Talking to a bank is NOT a Pre-Approval

Alright my dears, let’s dive into the first of many sometimes unspoken Real Estate Etiquettes. As you all know, one of the first steps you need to make in preparation to purchasing a home is to get a mortgage pre-approval. Unless you are paying cash in full.

For the most part however, I would say 95% of people will borrow money from a lender to fund their home purchase. Even if they have the money to pay in cash. Why? Because it’s about leverage. Which is a whole other debate in itself we can save for another time and discussion.

Talking to a bank is a good start, but this does not constitute a formal pre-approval. A formal pre-approval is when your lender is ready and able to provide us with a statement in writing that clearly defines your purchasing ability and budget.

This means you would have submitted all your required paperwork and documents to them (proof of your total saved downpayment and sometimes where/how that downpayment has been acquired, how long it has been sitting in your account, proof of income, employment verification/employment letter, 1-2 years tax history, current outstanding debts, etc.) There may be other items they may ask from you, but these are the popular basics. Please make sure to speak to a licensed mortgage broker.

As a matter of fact, there are 3 points at which we are looking for dedicated approvals;

1. Your general basic pre-approval before we start you off searching for your home

2. Your specific approval on the particular home you have chosen to write an offer on in hopes of proceeding with its purchase

3. Being granted the promised funding on the day of your closing. (Believe it or not, this does not always happen! These situations are often rare and would constitute a nightmare deal) But I’ve seen it first hand and it happen. Otherwise I wouldn’t be telling you about it.

I want you to have a smooth experience. Happy House Hunting!

-The Real Estate Mother