Money Influencer Vivian Tu: Here’s a Top Hack When You’re Looking To Buy a Home
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Kellan Jansen
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Amber Barkley
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Financial expert Vivian Tu shared her top hack for home shoppers in a recent TikTok. That tip? Showing up to your next open house with a mortgage preapproval letter. Here’s what that is and how it can help you.
Next, check out some expert tips on how you can get preapproved.
What Preapproval Letters Show
A preapproval letter is a document from a lender that shows how much money you could borrow to purchase a home. Sellers like to see these documents, because they show that you’re a serious buyer with funding.
Tu said there could be a more competitive real estate market for buyers soon, as mortgage rates decrease. Bringing a preapproval letter to your next open house can help you stand out to sellers. That could be what it takes to score your dream property at a fair price.
Preapproval Letters Aren’t Binding
That being said, you should know that nothing is binding in a preapproval letter. Lenders typically base them on the information you provide, which may not always be accurate.
The good news is you aren’t committing to anything, either. You can present a preapproval letter at more than one open house without any issues. It’s just a way to show that you have the means to purchase the home if you decide to do so.
Applying for a Preapproval Letter
Getting a preapproval letter is a relatively straightforward process. You’ll probably need to provide details about your income, expenses and credit history. The lender will review your information and tell you if you qualify for a mortgage and how much.
However, every lender does this differently. Some may ask for more detailed information and even proof of income before delivering your letter. Others ask for very few details in an effort to get your business.
The key takeaway is that your preapproval letter is only as accurate as the information considered when creating it. For example, you could maybe get away with stretching your income when applying for preapproval. But that would be caught and corrected when you applied for the real mortgage loan.
Avoiding Potential Issues With Preapproval Letters
When you apply for preapproval, a few things can happen. You could get approved for an amount that fits your budget, get approved for a lesser amount or be declined. These all raise different potential issues. For instance, if you get approved, that doesn’t mean you have to spend the full amount. It will still be essential to check your budget to see how much home you can truly afford.
If you get approved for a lesser amount, you may need to consult with the lender to learn why. They can tell you what you need to fix before qualifying for the full amount you need to buy your home.
Your application for preapproval could also be denied. That doesn’t necessarily mean you’re not going to be able to purchase a home. But it does show there’s some issue preventing you from doing so through a traditional mortgage today. Finding and solving that issue would be your next step.
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