Before you make a decision to buy property, you should prepare yourself to be in an immediate buying position. In a competitive real estate market another buyer may surge ahead of you to purchase the property you had your heart set on if you have not completed the pre-approval steps. This process will provide you with a "Pre-Approval Letter" sellers are looking for to know you actually have the ability and purchasing power to buy their property and aren't just wasting their time.
What to do:
First, avoid making large purchases. You may be tempted to buy big ticket items on a credit card or revolving account for the home you hope to buy, but resist! Closing on the deal first is a wiser choice, and can make the difference in whether you qualify for the loan amount.
Shop lenders: banks, credit unions, referrals from your real estate professional or builder. Compare rates and reviews. DON'T OVERLOOK REVIEWS.
Provide all necessary financial information to the lender you have chosen, including bank statements and W-2's.
If you have any credit issues, the lender may discuss whether you can qualify at this time or possible solutions toward correcting the problem(s) and improving your score for a successful real estate purchase.
When all matters are settled satisfactorily you will receive a "Pre-Approval Letter" making you a legitimate buyer and speeding up the process for a purchase. Going through these steps in advance will also help clarify the loan amount you actually qualify for, and prepare you to place a serious and real offer with the seller.