Find the property & get the loan or vice versa?

2 Replies

Hi all, 

Newbie question.  I am actively looking for a rental property and would like to know if I should get the mortgate pre-approved or find the right property and get the loan.  Looks like some of the sellers are interested only if the buyer has a pre-approved loan.  

Locking the loan for 2 or 3 months has a downside if I am not able to buy any properties in that time period.  If I keep applying for pre-approvals every 60 or 90 days, it may ding my credit score.  So, I am wondering what is a good way to handle this situation?



Step 1:  Work with a good mortgage company that will take all of your personal financial information and compute a price range that you can afford.  Make sure that they do this without pulling your credit report.  They will be able to give you a ballpark on interest rates and fees but you won't know for sure until they actually pull your credit.

Step 2:  Shop around for properties and find the one that you want to make an offer on.  If you are in a competitive market I suggest that you get the pre-approval letter from the bank so that you can present it with your offer.  This way you could potentially beat out a similar offer without a pre-approval letter.  If they ding your credit and it goes from 750 to 745 it's not really a big deal, just consider it a "cost of doing business".  If you are in a slow market don't worry about the pre-approval letter at all.  If the seller comes back and says they want one, only then provide it to them.

If it takes you longer than 180 days to find a deal you're probably in the wrong market!  So I wouldn't sweat that detail too much! :-)

Good luck!

Good points Jeff.  Thanks 

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