When to get pre-approval for financing

Question

Hello all,

I'm beginning to house hunt for a tri/quadplex in Florida. The market in Florida is very hot and inventory is very limited. With that said, properties are going very quick. In most cases 24 to 48 hours. This will be my first investment so I'm curious as to when to get loan approval knowing this process could take months to find a great deal here and knowing loan pre-approvals typically only last upto 90 days. Do I have to keep getting approvals every 90 days to stay competitive with placing bids? This approach would create a hard inquiry on my credit and not something I would want to do. How do those with investment experience suggest I start? I plan to use a Heloc or refi (as of now) to use as the down payment and for any upgrades/repairs that are required and finance via a loan.

Thanks in Advance!

Masha Rizzi · Answer

If properties are going that quickly then I would definitely recommend getting your financing pre-approval sorted out now. The 90 day window can be a bit scary if it's your first time, but if you're already familiar with your market and dedicated to really finding that deal then you'll get something before the 90 days is up! That being said, make sure you *do* understand the market in your area ahead of time. Just because properties are only staying listed for 24-48 hours *does not* mean they are actually good deals. In fact, it may be quite the opposite! They could be great deals for the average homebuyer, but may not actually have the cashflow required for an investor.

Brad Jacobson · Answer

Hey @Steven Brown,

Most lenders will want to run your credit prior to giving the full pre-approval.  There are some lenders who have alternate methods that might not do a hard pull but either way, you need to get pre-approved now if you're serious about making a purchase.

As you mentioned, if the good properties are going in 24-48hrs, you need to have all your ducks in a row including a pre-approval and a great agent at the ready to walk you through the proper way to compete.  Getting the pre-approval will also motivate you and a good credit score that's never put to work is pointless!

Good luck!

Steven Brown · Answer

Thank you all for the replies. Fortunately my wife is a realtor and can watch the MLS for potential leads to run the numbers and respond accordingly.

I was a bit worried about only having the 90 days at most but that definitely gets you motivated to find a great investment.

My credit is pretty solid so a hard inquiry here and there shouldn't hurt it too much, I just don't like having too many on my report.

I haven't got the pre-approval just yet, but do need to get one soon.

Joe Miller · Answer

Get everything in order 100%- you will waste time if you are looking around without a pre-approval in hand. An offer without a pre-approval is useless and will not take down any deals.

90 days is longer than you think!

Conner Olsen · Answer

@Steven Brown Yes the preapproval typically expires in 90 days. But if you have to get another preapproval the bank already has all of your documents so it shouldn't be too hard for them just to pull your credit again and give it to you. They might need a couple more bank statements but it should be a quicker process than the first time getting preapproved.

When to get pre-approval for financing

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