You’ve found a home you love. You think you can afford it. What’s the next step?
Get pre-qualified as soon as possible, with help from a mortgage broker.
Traditionally, you may have called your bank to get a pre-approval for a mortgage. But that’s gotten to be much more difficult. Banks are either shutting down that service because they’re trying to watch their bottom line (pre-approvals cost them time and money, and they don’t want to work on a loan unless it’s the real deal). Or, banks are so swamped with refinancing and other dealings that it may take more weeks before a commitment letter arrives from a bank. In the meantime, that house may have gotten another offer.
“Banks are definitely getting backed up because of all the refinancing and they’re pretty short staffed. It may take two, three, four weeks to issue a commitment letter,” says Dean Kessler, managing director at The Manhattan Mortgage Co. “It’s important for people to get pre-qualified ahead of time…if [you] want to get a quick closing.”
A pre-qualification is not as formal as a pre-approval, which requires banks to check your whole financial picture, including tax returns and bank statements. But it still gets the ball rolling. It basically involves the mortgage broker analyzing your debt to income ratio, the amount of your down payment, and possibly running a credit check. “Then we include a disclaimer that says this is subject to a bank’s full approval,” says Kessler. It typically costs you nothing and can be done during your lunch hour.