Hello Forum Members!
I am brand new to the forums and had a question in regards to financing a deal. In particular I would like to know the appropriate time to get a loan on a house. If I am looking at a pre-approved loan, like an FHA loan, should I do it before I start searching for properties? If I am doing a hard money loan, wouldn't I need to figure out all of the details of the property before I am able to apply for financing? Should I pull the information about the house, run my due diligence and look for a loan? Or should I get my offer approved/under contract and then search for a lender? How much time does that give me? Any help or advice would be greatly appreciated!
I strongly suggest you get pre-approved with a traditional lender first. You can always go hard/private money later, but a traditional lender (bank, credit union, national or local purchase lender, etc.) will be able to tell you how your debt-to-income will be calculated per government guidelines and underwriting. Ultimately, this will tell you how much you can qualify for.
Thanks so much Michael!
To add to what @Michael Cohen said, that preapproval letter from a reputable local lender also says to real estate agents and homesellsers that you are not a waste of time.
Homesellers are well within their rights to direct their listing agent to throw away any offer not accompanied by preapproval (or proof of funds) without even presenting it, in spite of the common claim that listing agents are "required" to submit all written offers.
What commonly comes up is someone wants to wait until they find their property to gather their credit package, and then they find the dream home/investment, but offers are due at 2 pm and they aren't preapproved. Whoops, now the procrastination means they missed out on their dream home/investment.