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Old 04-25-2009, 08:47 PM
 
19 posts, read 44,518 times
Reputation: 10

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Hello,

We recently saw a house in Central Jersey (Old Bridge) and we liked it.

I ask about the further process and and our agent asked me to get a pre-approval from bank/mortgage lender.

Is it MUST to have a pre-approval to make an offer?

Why not make an offer and once we are through the process of negotiations, we directly apply for the loan? How long does loan application, upto the decision that if I will be approved (for the loan I am applying for, which I am pretty confident that I'd be) and get a letter to the seller's agent that OK THE GUY IS APPROVED AND WE'D MOVE TOWARDS CLOSING

Thank you.
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Old 04-25-2009, 08:54 PM
 
Location: GA
2,791 posts, read 10,805,825 times
Reputation: 1181
Sellers (and agents), especially in this market, prefer to have a buyer that has been approved. If the buyer has it before the offer, things move along more smoothly and quickly.
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Old 04-25-2009, 09:19 PM
 
Location: Toms River, NJ
1,106 posts, read 4,897,408 times
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As someone who has sold a home, when I was presented with an offer from someone that had pre-approval from a lender that we could not verify (the letter came from a relative that was an "independent lender" - whatever that means) and they were only putting 5% down, I rejected the offer.

I didn't want to pull the house off the market for the 45 days until closing only to find out that they couldn't afford the house. Of course I don't know what would have happened but I considered it a risky offer.

One week later I got an offer with 20% down and a pre-approval from a local bank. I sold the house without any problems.

Good luck!
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Old 04-25-2009, 10:28 PM
 
19 posts, read 44,518 times
Reputation: 10
Thank you for your responses.

Do you think following can make difference?

We are definitely going to put ATLEAST 20% down
and

(if I understand it correctly)
Following are the steps of process.
1. We make an offer
2. Negotiation
3. Offer Accepted (until this point house is still on the market)
4. House taken off the market.
4. At this point, I need to get loan approved which I *think* would not take more than maximum of 2 days (upto the point where bank tells me if I will get that loan amount).
5. And if approved, I ask bank to give me letter of the approval and continue with other processing towards closing.

I do not mean to argue/make excuses but just want to clarify my confusions as a first time buyer.
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Old 04-25-2009, 10:50 PM
 
Location: Jersey Shore
831 posts, read 2,436,905 times
Reputation: 301
Quote:
Originally Posted by firsttimenjbuyer View Post
Thank you for your responses.

Do you think following can make difference?

We are definitely going to put ATLEAST 20% down
and

(if I understand it correctly)
Following are the steps of process.
1. We make an offer
2. Negotiation
3. Offer Accepted (until this point house is still on the market)
4. House taken off the market.
4. At this point, I need to get loan approved which I *think* would not take more than maximum of 2 days (upto the point where bank tells me if I will get that loan amount).
5. And if approved, I ask bank to give me letter of the approval and continue with other processing towards closing.

I do not mean to argue/make excuses but just want to clarify my confusions as a first time buyer.
What you need to do is talk to your realtor. They must have a mortgage person on their staff that can pre qualify you for a loan. Its just the basic info they will run your ss numbers and check your credit.. Based on the info you supply them with regarding jobs and salaries and your credit score they will determine the max amount you would qualify for. Be honest and up front, because it will show up in the end. Once this is done (takes a few minutes) you can make the offer on the home. The realtor will present it to the seller. If accepted it will go into an attorney review (you have to find an attorney) where they will pick apart the contract. After the attorney review is completed you begin your process of finding a mortgage lender. You will get your inspections done on the home. Just remember your only out is either thru the inspection process or the mortgage contingency clause. Make sure your attorney covers your ass or you could lose your deposit.
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Old 04-26-2009, 06:01 AM
 
Location: GA
2,791 posts, read 10,805,825 times
Reputation: 1181
Get pre-approved first. Then you'll know how much your real budget is.
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Old 04-26-2009, 06:41 AM
 
Location: Hackensack, NJ
777 posts, read 2,379,526 times
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What is the big deal getting pre-approved first?
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Old 04-26-2009, 07:43 AM
 
11,337 posts, read 11,034,939 times
Reputation: 14993
Hi Firsttime,

Just get the pre-approval. Your offer is very weak without one, even with a large downpayment. The mortgage is the linchpin of any deal. Unless that looks strong, the rest is a footnote.

In any case, a pre-approval takes literally minutes to secure, so there is no reason not to get one. It will provide you with some good information also.

You do not have to use the mortgage company that gives you the pre-approval. There is absolutely no obligation and you do not have to sign anything.

-Marc
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Old 04-26-2009, 09:03 AM
 
Location: Rahway N.J
2,093 posts, read 5,458,842 times
Reputation: 3360
Quote:
Originally Posted by firsttimenjbuyer View Post
Thank you for your responses.

Do you think following can make difference?

We are definitely going to put ATLEAST 20% down
and

(if I understand it correctly)
Following are the steps of process.
1. We make an offer
2. Negotiation
3. Offer Accepted (until this point house is still on the market)
4. House taken off the market.
4. At this point, I need to get loan approved which I *think* would not take more than maximum of 2 days (upto the point where bank tells me if I will get that loan amount).
5. And if approved, I ask bank to give me letter of the approval and continue with other processing towards closing.

I do not mean to argue/make excuses but just want to clarify my confusions as a first time buyer.

1. would be the pre approval (if you are using an agent they would need that to keep your search within your price range)
2. when you find a house you like ,your agent will put your offer together and send it to the sellers agent along with the pre approval
3. negotiations
4. offer finally accepted , it is now in attorney review (usually 3 days)
the house is still on the market with a notation that it is in attorney review
5. after the attorneys dot the i's and cross the t's it is out of attorney review and marked as under contract
6. you order your home inspections and make sure any Co inspections are done around the same time
your lawyer starts ordering all the searches needed such as the title search.
your mortgage broker starts getting all his paper work in order to get a mortgage commitment by the day specified on the contract, they will also do an appraisal to make sure house is worth at least what they are lending you. all the above can be done quicker but the usual time frame is
(usually 30 days from date of contract for mortgage commitment and 30 days after that to close)

if all goes smooth than a few days before the closing date you
go get your home owners insurance . the day of the closing you do your final walkthru the house and then head on over to the lawyers office for the closing


Good luck with your purchase
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Old 04-26-2009, 12:13 PM
 
19 posts, read 44,518 times
Reputation: 10
Thank you very much to all of you. I really appreciate the time you've put in this.
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