How To Get Preapproved For A Mortgage

Do you want to buy a house but aren't sure how to get preapproved? In this video, I'm going to show you what you need to do to get your preapproval so you'll have the best chance of getting your offer accepted. We'll look at the different phases of the preapproval process and find out how you can best be prepared for getting out in the field.

Why Preapproval Matters

Our market is elevated, inflation is on the rise, we're recovering from COVID, and the sky is falling - but you still want to buy a house. What are your steps, and how do you get pre-approved? This one of the most important questions you can ask.

The truth is that most realtors will not want to go show homes to you without you having done your homework. Pre-quals don’t cut it anymore. Why? Because if you’re a seller, you’re going to want to know that the buyer has actually gone through the rigmarole of getting their credit checked and filled out all the data on a complete loan application.

The preapproval shows that a buyer's banker - someone like me - has actually reviewed all of their documents, ran their credit, structured their file, and gone through a fairly arduous task of getting prepared for what we call the field. So how do you get a pre-approval?

The Preparation Phase

To get you preapproved, we first do a discovery call with our clients. In our preparation phase, we do a pre-qual first to get some basic metrics, like our clients' credit score, debt profile, and income. We'll calculate some numbers to give us a baseline, which we can then compare with how much you want to spend on a property.

In my opinion, getting pre-approved for a certain dollar value is not the way to fly - and here’s why. When we send clients out in the field, they need to know their "oh, no" number. This is the amount you cannot exceed. If you can’t live, eat, sleep, invest, or you'd be too stressed to buy a house above a certain price point, that's the number you shouldn't go beyond.

For most people, the great thing is that if you’re prepared properly, have the right debt profile, and have the right savings, our clients can often afford more than they really want to spend. This is how you win in a seller-friendly market like we are in right now.

The Dating Game

That initial pre-qual is kind of like the dating game. You want to talk to somebody (like me) and get a good feel for them. If you like them, you think they can help you, and you have a good personality fit, you can go on to the dating phase.

The application phase is like the first couple of dates. You’re filling in your loan application, you’re gathering your documents, and the banker is reviewing those. These are things like your 30 days of pay stubs and two years of W2s, depending on if you’re self-employed or if we need to use rental income for some reason. It also can also include tax returns and assets statements of where the downpayment is coming from.

As you build out the basic foundational documents for all home loans, we call it the dating phase. In the current lending environment for mortgages, this is where it gets a little bit more involved. We’re looking at credit, talking about your future goals, discussing how you want to use the property, and structuring and formulating your loan product.

Prepping For The Field

The dating phase happens before you get super excited and want to place offers. In today’s environment, the person that can take a step back and leave their emotions at the door is the client that is ready for the field. They’re ready for negotiations and they’re ready to compete against those other big heavy cash buyers - your competition.

Not only is the goal to get under contract, but it's also to beat out all those other people that might be willing to possibly pay more than you are. How you can defeat them is by your preparation. This is why getting a pre-approval is key. Once you have your documents gathered, the next step for us is a total cost analysis and buyer presentation.

We'll take our foundational information - which is your loan documents - and analyze them. We'll give you a credit report, review, and audit to see if we can’t boost up any scores or if you’re deficient in any areas. My team also helps formulate a net worth spreadsheet for you so that you can see where you’re coming in with your net worth. Chances are, you’ve probably never calculated that before.

Finding Your Home

Our prep work helps your realtor partner excel in the field with negotiations. It gets everything out of the way now so that when you’re looking at homes and ready to place offers, you’re not getting caught up in emotions. You don't have to feel rushed to get a house or make a quick decision. With my loan product, you’re prepared. You can be analytical when you’re in the field placing offers on properties because your pre-approval process is complete.

For more information, be sure to snoop around my channel to get your brain growing. We also have a free loan qualification certificate available so you can find out how much mortgage you can qualify for. Make sure to also scope out our free mortgage calculators so you can start preparing. And if you need help to find the home you want, feel free to reach out and we'll be happy to help.

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