Find out about Real Estate on the Monterey Peninsula

Ok, so you’ve decided to take the plunge and join the ranks of happy homeowners.

What’s the first step? Find out if you can qualify for a mortgage of course. Unless you can pay with all cash, you will need someone to lend you the money to buy your property. If you are serious about buying a property , you’ll need to go beyond pre-qualification to pre-approval. How does that work?

When the market was red hot for sellers back in the early part of the decade, buyers only needed to get  "pre-qualified" in order to submit offers. This could be accomplished by a simply telephone call or internet webpage being filled out. You simply stated your income and your debt obligations and then they ran a simple credit report. If things looked good on your credit report, you were issued a "pre-qual" letter and your Realtor could make offers and submit that with the offer.

Since funding was pretty easy, most sellers accepted that and the buyers would go through the process of actually getting loan approval during the escrow period. Nowadays, it’s a total different story. Sellers (especially banks) won’t accept offers without a "pre-approval" letter. This means tax returns, W-2 forms and actually paper documents of income and debt. Sellers don’t want to enter escrow with anyone who still has to get approved, they want assurance that the loan is all ready to go.

The mistake that agents make is taking out buyers who have not been pre-approved. Many times a buyer will see something he likes, but will find out he can’t purchase that home when he tries to get a loan for it. It’s a waste of their time, the agent’s time and the seller’s time. It’s important to know just how much a buyer can pay. It’s important to know just how much a buyer will have to bring to the escrow for a down payment. It’s also important to know if a buyer will accept the market interest rate and mortgage payments he will have to make.