Secure Your Financing Before You Make an Offer


The last year and a half has seen an extraordinary real estate market. It has been a true seller’s market with houses turning over at a frenetic pace. Many listings last only a few days, and often, just a few hours; and many listings receive multiple offers. The demand has been historically high compared to the inventory of available properties, and competition has been so fierce that it has not been unusual to see homes selling for tens of thousands of dollars above their original asking prices. 

If you’re determined to buy a home in this market, one thing you absolutely must do is line up your financing before you make an offer. Sellers in this market can afford to be extremely picky about which offer to accept. They have many to choose from and don’t have to waste their time with questionable offers and demanding buyer contingencies. And they certainly don’t want an offer where the financing is not in place. They want to know that if they accept your offer, you already have the money to complete the transaction on a timely basis, with no delays while you wait for approval. In fact, many realtors won’t even allow potential buyers to tour a listing if they don’t have a pre-approval letter from a bona fide mortgage lender.

A pre-approval for financing is important for two reasons. First, it shows the seller that you are tendering a serious offer for their property. Second, and even more importantly, you know exactly how much house you can afford so you don’t experience the frustration of having your bid accepted on a house only to have your lender inform you that you don’t qualify for the mortgage amount you applied for, and suffer the embarrassment of having to rescind your offer.

To secure a mortgage pre-approval, you must complete a mortgage application and submit all the required documentation, which can include:

  • Tax returns (typically two years if you earn bonuses, commissions, or are self-employed)
  • Pay stubs and W-2s for the past two years
  • Financial statements (if you are self-employed)
  • Bank, investment, and retirement account statements (up to 12 months depending on the loan)
  • Divorce decrees if you receive or pay alimony or child support
  • Letters explaining any blemishes on your credit report

These are the most common documents asked for, but lending institutions vary and some may ask for additional information before approving your mortgage loan.

It’s important to remember that your pre-approval letter doesn’t lock you into working with the lender that issued it. You’re free to shop your mortgage to other lenders to obtain the best rate on your loan. 

Your best strategy is to get your pre-approval from a reputable lender, have your offer accepted on the house you want to buy, then shop your mortgage to a minimum of three lenders, but preferably several more to get the best quote possible. As a rule, don’t take the first quote you’re offered. Failure to shop your rate can cost you thousands of dollars more in fees and interest expense. 

Our experienced realtors can advise you on the process, give you a list of reputable lenders, and work with you to prepare and submit your documentation so that the process goes smoothly and efficiently. 

875 Oak Ridge Rd
Muskegon, MI 49441

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