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Friday, March 22 , 2019, 3:35 am | Fair 47º

 
 
 

Elaine Abercrombie: Loan Search Before Home Search

Pre-approval can save you money and provide leverage when negotiating your purchase

Elaine Abercrombie
Elaine Abercrombie (Roe Anne White photo)

Want to see homes that are exactly what you can afford? Want the best possible terms for your mortgage? Want to show sellers that you’re serious and capable? Then start with pre-approval, from several lenders.

Forget about “pre-qualification” — that’s just a quick ballpark figure the banks will offer without even checking your credit history. “Pre-approval,” on the other hand, produces a Good Faith Estimate, which spells out the terms of your loan, such as interest rate, loan type (fixed rate, adjustable, etc.) and closing costs.

You’ll have to provide documentation (bank statements, pay stubs, W-2s, etc.) and the lender will check your credit report, but this extra work will give you a much firmer idea of what you can afford, as well as give you a powerful tool for making an offer and negotiating your purchase.

If you’re serious about maximizing your investment, don’t get just one letter of pre-approval. Apply with several lenders, because little things such as the interest rate can make a huge difference when it comes to such a large amount.

Don’t just accept the first offer. Make the banks compete, and you could save thousands by comparing their terms.

Banks won’t guarantee the loan until you’ve made an offer and the appraisal and title work have been approved, but you can’t go wrong by doing your loan search before your home search.

Elaine Abercrombie, a broker with Abercrombie Fine Homes, is president of the Santa Barbara Association of Realtors. She can be contacted at .(JavaScript must be enabled to view this email address).

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