When should I get loan approval?
The best time to begin the loan process is before you begin looking for a home. This means if you are transferring into the Denver area, you should start working with a "local lender" prior to your arrival in Denver. Your loan should be started and at least far enough along so the lender can give you an "approval letter" or the very least a "pre-qualified letter".
Obviously an "approval letter" is by far the best. It not only provides you the borrower with the assurance that you can finance a home, but more important, it provides you with a very strong negotiating tool. Sellers are much more motivated to deal with a buyer who is serious and can prove it. They know that if the terms of a sale can be agreed upon and once the property appraises and passes your inspection, the transaction will take place. The guess-work is eliminated.
What constitutes loan approval?
As the borrower your credit can be approved but truly loan approval does not occur until the lender has been satisfied with the value of the home, by having an appraisal done. In some situations the lender also will require a survey or ILC (improvement location certificate) to be done to assure the home is within its legal boundaries. A title commitment is required by the lender to assure no other liens are currently on the property. Once all these items are satisfied the lender will "approve the loan."
Why is loan approval important to me?
Colorado contracts have specific deadlines outlined for loan approval. This is important to a purchaser in that if the deadline is not met, the buyer is considered "out of contract". This means the borrowers earnest money can be held by the seller and worst yet, if the seller doesn’t want to sell he doesn’t have to.
The sad but true fact, even though the lender is in control of the loan process, they have no responsibility in the contract. It is the buyers responsibility to meet the contract dates. Here, once again I stress the importance of using a good, reputable local lender.
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We Know the Territory
Are you looking to buy or sell a home? Let us at The Berkshire Group assist you. We will take care of all the important and necessary details while you can attend to moving. Our business is helping you make the right decisions, guide you through negotiations, inspections and close on time. When it comes to Denver real estate, we know the territory. For experienced help with your real estate needs call now...303-589-2022.