Rates are flat today. Today’s rates with no lender fees are 4.25% on a 30 year fixed, 3.5% on a 15 year fixed, and 2.875% on a 5/1 ARM (click here to get the details).

Today I wanted to mention the importance of getting pre-approved before you start your home buying process. It doesn’t matter if you have a 50% down payment, an 800 credit score and have been at a salaried position for 20 years, you still need to be pre-approved.

I do a little role playing in today’s episode:


(Watch it on your mobile phone or email reader here)

You must have a pre-approval from your lender before you start looking at houses. There are little details you may not be aware of that your lender may require. Mortgage guidelines change very quickly these days, so you should be prepared ahead of time.

I know for a fact that any good Realtor won’t show you a home without talking to your lender or seeing a pre-approval letter. This is a great practice by them.

Why, you ask?

Because they don’t want to show ten houses to a buyer that may not be able to buy any of them. Frankly, it’s a waste of everyone’s time without pre-approval.

Here are a few conversations from “buyers” who thought they wouldn’t have a problem getting pre-approved.

Buyer #1 – What do you mean I can’t get approved? My parents are cosigning!
Loan Officer – I know they are, but your parents are in foreclosure right now. That doesn’t help your financial situation.

Buyer #2 – What do you mean I can’t get approved?
Loan Officer – Sorry Mr. Johnson, you are currently in the middle of a divorce.
Buyer #2 – So what? She’ll still sign off on it!
Loan Officer – I’m sorry, but it doesn’t matter. Your divorce will have to be finalized before you can get a mortgage.

Buyer #3 – Why can’t I get approved?
Loan Officer – You have only been self-employed for two months, sir. Lenders require at least two years of self-employment to prove your income.
Buyer #3 – But I pay all of my bills on time!
Loan officer – I understand, but we just can’t use your income.

Buyer #4 – Why did I get turned down for pre-approval?
Loan Officer – I’m sorry, Mr. Smith, but your credit score of 540 and lack of down payment isn’t helping your application.
Buyer #4 – So what? My friend told me there was a program for me!
Loan Officer – Your friend isn’t always right.

You may think you won’t have a problem getting approved, but until you’re actually approved you’ll never be 100% sure. You should ask your lender how long it will take to get your loan to closing, too. Your Realtor will need to write that into the offer.

If you thought this was good information or worth discussing, help me bring transparency to mortgage lending by sharing today’s episode on Facebook or Twitter.

Let’s change the way people shop for a mortgageā€¦forever!

– Mike

PS. To ask a question, get advice, or find out if you’re getting the best deal possible on your loan, just post a comment below. Daily comparison rates, calculators, and other cool features are available in the free Rates in Motion LoanApp by going to your smart phone and clicking on this link, activation code is 9203780002

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