Being Prepared with Loan Pre-Approvals

In the world of Real Estate, properties are listed every day, and all have varying degrees of marketability and appeal to potential buyers. In my own personal experience, I have never purchased a property, whether for investment or my residence, without some level of competition from other buyers or the dreaded “other pending offers”. Many of you reading this can relate to that as well. Aspiring home buyers want to move, investors search for the next great deal, and career Real Estate agents are well aware of what is available for their clients and some cases, even for themselves. During the pandemic, we saw properties being sold before clients could leave work to just get a look at it. Being prepared can make all the difference between adding to your portfolio or having to wait for the next one. Here are some important things to keep in mind.

• DSCR Purchase pre-approvals are easy to obtain. With no income verifications, a credit check and verification of down payment & settlement cost funds are all that is needed. Keep the most recent 30 days of bank/asset statements readily available for your pre-approval. As a general rule, with a 20% down payment and additional funds needed for settlement costs and reserves, you want to have 25-30% of your target purchase price available for loan verification. This can also be verified with multiple accounts and there’s no immediate need to transfer monies from a savings to checking or any other asset accounts. What is most important are that funds used for closing can be verified, and they are present and available for when they are needed. Very important- all funds used for any transaction must be in a US-based financial institution.

• When you decide you are “in the market”, let’s get your pre-approval to you right away. They are good for 60 days, and when you come across that potential property, you are ready to take action on it. Since there is no debt-ratio or income to analyze, any adjustments to the pre-approved purchase price is something that can be quickly done, providing you have the required funds needed at closing and the property appears to check all the boxes. As mentioned earlier, hours can make all the difference. Trying to get an immediate pre-approval on a Sunday when your loan specialist is outside cutting the grass (or shoveling snow) may not be the best course of action. It helps to be prepared ahead of time.