If you want to buy a Houston house, then we strongly recommend that you get pre-approved for a loan. This will help your final loan approval process, and will also help home sellers see your commitment and eligibility to purchase a home.
In this interview, James Beaver explains what is involved in the pre-approval process, and why it is important.
Welcome to the We Buy Houses podcast with our host Brian Spitz, President of Big State Home Buyers, leading the seamless approach to real estate investing in Houston since 2005. Brian’s specialty in this large wholesale operation is facilitating real estate solutions for people wanting to sell quickly. Each week we discuss the ins and outs of wholesale real estate investing and related topics by professionals who matter. And now here is Brian.
Hello, I’m Brian Spitz, President of Big State Home Buyers. We are Houston’s top company to go to if you need to sell your house fast. We pay cash, all closing costs, close quickly. We also help sellers identify other problems they may have or other solutions required and work with people to get conventional loans to meet all kinds of needs that they have related to real estate.
And toady I want to visit with James Beaver from Envoy Mortgage about the preapproval process and what it takes to get going. If you want to purchase a new house, what do you need to do to start that process? Thanks for joining us.
Pre-approval Process – Loan Application to Buy a House
Absolutely. Thanks for having me on the “We Buy Houses” podcast, Brian! I appreciate it. So the preapproval process is essentially what a prospective home buyer or borrower would want to do to make sure that they are getting all their ducks in a row to get ready to purchase a home, refinance, construct a home, and so forth. What a preapproval with us involves is first of all we’ll ask the applicant to fill out the standardized loan application for mortgage approval. We will pull their credit report, and then we will run their credit report as well as that application through an automated underwriting system, typically either through Fannie Mae’s underwriting system of Freddie Mac’s underwriting system.
What that does is it gives us kind of a response that essentially says, okay, assuming that the credit report stays substantially the same as we’re looking at right here, and assuming that we can properly document everything—the support, what you’ve written on the loan application—then you would ultimately be approved for a loan, and of course, assuming that the collateral, the home, also meets standards.
Gathering Documentation Before Pre-approval for Home Purchase
So then we go about the process of gathering the documentation that we know will be required to support what’s on the application and the credit report. For us, when we preapprove someone, we always want to review those items. We look at tax returns, bank statements, pay stubs, all kinds of stuff to make sure that we’ve really vetted that applicant because what we want to do is give them a very high sense of security, to empower them to go shop for a home and know that they should be able to get a mortgage, assuming there’s not some curveball that no one’s expecting.
Changes in Preapproval Process
Right. So I’ve noticed from different company to company not everyone is nearly as thorough with their preapproval process, or what their preapproval—the weight of their preapproval. So you really vet the client before.
Yeah, absolutely. You know, in the past, it’s no secret, our industry—the mortgage industry—has sort of gone through a lot of change over the last several years. One of the things that has definitely shifted has been this preapproval process. In the past it was a lot more of a good educated guess, you know what I mean?
Sure, we’ll give you a loan.
Yeah, and saying that someone was good to buy a home and finance it. And now, in today’s environment, we really want to make sure that we sit down. And we typically sit down and we’ll spend anywhere from thirty to sixty minutes just going through all the loan options, the process, the paperwork with a prospective client because we want to make sure that it’s solid.
Right, which is really valuable not just when you’re a home seller considering offers—you want your agent, or whomever, to know what they’re looking at when they look at a preapproval letter—but also as a buyer. We’re in the business of selling property, so I’ve seen plenty of times where a buyer is not able to close at the last minute, and nobody likes that less than the seller except the buyer because they’ve spent money on earnest money that they can’t get back, option fees, inspection fees, maybe an appraisal. I mean, there’s money that goes into getting qualified through the process before closing that you can’t recover if you don’t the mortgage.
Absolutely. Yeah, we take it very seriously. We want to do everything we possibly can to eliminate those surprises and ensure a smooth transaction that leaves everyone feeling very happy about what just took place. Yeah, absolutely.
0:04:42.5 So if you have more questions on how to sell a house quickly or anything related to that, I encourage you to visit us at bigstatehomebuyers.com. There’s a lot of information in our blog and videos that can answer a lot of questions for you. You can also contact James Beaver at Envoy Mortgage, envoymortgage.com.