Should I get pre approved before looking for a property?

Question

Title says it all. Should I get pre approved for a mortgage before looking for an investment property or should I have my eye on a property and then get pre approved for the loan in it.

Rob B. · Answer

I'm in 100% agreement with @Anastasia G. - that pre-approval process is key; definitely, need to have that ironed out before seeing possible investment properties. Figure out buying power and go from there. I will say, once you do complete the pre-approval process, and once you find a place that you want to go ahead and pull the trigger on, there are definitely some tools out there that can help to keep the rental management process easy for you, as alternatives to divvying out 6-10% and a month's rent to a PM.

Theresa Harris · Answer

@Noah Mccurley  I agree with the others.  If you don't know how much you are pre-approved for, you don't know what price range to look at.  Being pre-approved will also allow you to move a bit quicker.  You still want to include the subject to financing clause in any offer.

Anastasia G. · Answer

Hello Noah, what are your goals? Going through pre-approval will help you to determine what is your buying power. You would need to have pre-approval before seeing properties. There are different financing options. If you are a first time homebuyer and if you would consider 2-4 units you can get assistance with downpayment/closing costs/interest rates.

James De Stefano · Answer

For sure Pre-Approved.  You need your offer to be taken seriously, even if you are paying mostly or all-cash.

Good luck, and make sure you read/ listen to podcast about getting things ready before just sending out offers.

Sam Shueh · Answer

You can always look for a property online anytime. However, until you have spoken to a loan official with preapproval documentation, you do not know how much (max) you can afford it. Put it bluntly, most sellers prefer major lenders not out of town banks. Those with a loan broker signatures from out of town are scrutinized as many are not reputable. Want to increase your chance, proof of funds, and EMD need to be ready. If you have impressive FICO score show it to prove that you are credit worthy.

Syed H. · Answer

Huh? Why? A POF statement is more than enough if you are paying cash

Jonathan Bombaci · Answer

While getting pre-approved before looking is the standard advice and I’m 100% supportive of that when looking at single families or condos, I’m going to offer an alternative.

If you’re unsure what area or what type of property you want to buy then it may make sense to get out to some open houses and look at some properties before seeking a preapproval. For example if you’re planning to buy a 2-4 family with a residential loan the underwriter will need to know the taxes and rents for the preapproval process. In that scenario I normally help clients narrow their focus and pick out a few recently sold properties in a few different towns (taxes differ greatly in MA based on town) that meet their criteria. We then send those to the Loan officer, with market rent $, and ask would I be able to buy something that looks like this? It’s normally a constructive process and allows them to better understand the underwriting process.

That being said I will not book private appointments at tenanted properties for clients without a pre-approval in hand. Open houses, group showings, or vacant properties are okay but if people are living there then we need to be serious about being able to buy it before I we inconvenience them with a showing.

Jerry Padilla · Answer

@Noah Mccurley

Just as everyone mentioned you should get pre-approved first for a mortgage before looking so you know your price points and down payment requirements etc.

A SFR is 15-20% down and a MFR is 25% down for conventional financing. There are also reserve requirements with investment properties as well.

Should I get pre approved before looking for a property?

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