If you’re looking to buy a house in 2022 or in the near future, what do you need to know about getting pre-approved for a home loan? That’s what we’re gonna talk about. My name is Eric Sztanyo from Keller Williams Realty and team sztanyo.com, where we are helping you find your home and strengthen your family. Let’s learn more about getting pre-approved with Geoff Bostick!
The Process of Getting Pre-approved for a Home Loan
Geoff Bostick:
Hey guys, I am Geoff Bostick. I am vice president at Guaranteed Rates, and I’ve been there for about five years now and been in lending for about 14 years altogether. .
Eric:
I haven’t done this on the channel yet. We’ll probably be doing more of this- this year in terms of bringing in other professionals who are in the home, buying home, selling world of professionals, cuz there’s a lot of people you have to deal with. We deal with Geoff a lot. You don’t have to use this guy. I mean, can you really trust this guy? Look at him. He’s you know, but no, I’m just kidding. Geoff is great. We have a handful of different lenders that we refer clients to. We always recommend him. If you have someone you’re already working with, great use that, that’s fine. If you want referrals to people who are local here, which is always nice. I find like when you’re going through the loan process, things can happen. It’s always nice to be able to knock on the door of the who’s doing the loan and say, Hey “fix this, please. What’s going on with this?”
Geoff is one of those partners we use. His team is great. He’s great. So he’s here today and we are here talking today about getting pre-approved for a home loan process. When should you do that? I terms of you wanting to buy a house, when should that happen? What’s that process look like?
Geoff Bostick:
That’s a great question. And so what we find a lot of times is people will reach out and they are planning for maybe the next three months, six months or twelve months, and depending on where you’re at in that stage and when that move’s gonna be occurring. We might wanna start with just the prequalification. That’s just a simple conversation of here’s my debt. Here’s what my income looks like or what I plan for it to look like when I move.
Eric:
So I hear that phrase that, but explain to us the difference between a pre-qualification and getting pre-approved.
Geoff Bostick:
Yeah, so pre-qualification is really just that first step. It’s not really a commitment of providing documentation and we don’t run a credit check. So it’s strictly, if I were to do this, could I afford to buy a house or am I set up to buy a house? So it it’s the building blocks. And so we do that with a lot of people and I recommend that if you’re more than six months. And that’s just to really set the stage.
Eric:
Okay. And so just so we’re all on the same page here. Why would a credit check be disadvantageous if you’re not looking to buy within six months?
Geoff Bostick:
Yeah. So a credit report is technically good for just about every loan program out there. It’s good for four months. And so I say that six months or less, as soon as somebody gets pre-approved, a lot of times your mindset changes and you find a house pretty quickly. But you might have some work to do on your credit. A credit inquiry could have a small dip in your credit report or it might just not be necessary right now. And I also often encourage, if you are planning ahead, make sure you’re monitoring your credit, keep a look at it, either through your bank or through your credit cards. It’s usually an option to monitor. So that way you can see, is there anything negative currently reporting that you want to get cleared up before we, as the bank pull your credit to see what’s on there? So, if you’re planning long term, I often say, “let’s start with the prequalification.” If you’re four to six months or less, I say, “let’s get started with the preapproval.” That get you armed and ready to buy.
Eric:
So before we start with the process of getting pre-approved and why that’s so important in today’s market, tell me a little bit more like, so if you see some things on the credit and the prequalification and, and you said you might need to work on that. Why is that important? And do you guys actually give tips on how to make the credit better?
Geoff Bostick:
We can absolutely give some tips. It’s not something we are not credit experts, but we’ve seen a lot of credits over the past, you know, decade or so. But yeah, you want to make sure you have healthy credit when you’re going to buy a house. This is a major financial purchase and a few points or credits blocks. They go on like 20 point increments. And if you are in tier two or tier three, that could cost you either extra closing costs or a higher interest rate. And when you’re making a purchase, that could be several hundreds of thousands of dollars that interest rate. You want to be able to qualify for the best available. So it’s very important.
Eric:
So it comes down to saving you money. I mean the higher the credit score, the better rate. You’re gonna get less fees, better terms all around. So let’s say even if you’re not planning on buying this year, but you’re thinking about ahead of time in the future. Start thinking about your credit, seeing if you can improve that because that’s gonna save you money in the long run.
Geoff Bostick:
The number one most important thing behind stability of income and those, but yet credit is the number one driving factor, which is gonna dictate all the terms of loan.
Eric:
Okay. I think we might get another video down in this little series here. We might film a few, but of what not to do when you’re going through this process. So maybe we’ll save those questions for that video. So let’s talk about the preapproval. Let’s say you’re within that six months. And you’re looking to buy.
Geoff Bostick:
So at that point I said, let’s get you a set for pre-approval it’s the next level of commitment. It’s not a financial commitment. But we get that question a lot also “Hey, does this cost anything?” It doesn’t. Well, we just wanna set you up to be able to buy and get you a preapproval. So you’re armed and ready to start shopping. We go through a brief application and it’s more a questionnaire. We need to get two years of residency history, two years of employment history. If you were a student or something prior to that count as employment history in our world. And then we’re gonna start to ask for some financial documents. We wanna see a recent W2, maybe a couple pay stubs. Verify where your down payments coming from. Or if you’re maybe selling a house to liquify some of that money there, take the equity towards the next house. We’ll just talk through some of that process. So we do a credit check at that point. We verify your income and that way we know before you go shopping, all those boxes are checked off.
Eric:
If you’re a super organized person, you’re like “yeah, I’ve got all that in one Google drive folder. No problem, it’s easy. I can hand it to you in 20 minutes.” If you’re not super organized. What are maybe some tips, you know, as people are trying to gather all that, you know, it can be overwhelming. You’ll like, oh my gosh, they need another document. How do you kind of coach people along those lines?
Geoff Bostick:
Some people actually see their pace stuff, right? If you worked a double or two jobs, some people have those. A lot of people, it just gets direct deposit. They don’t even know, they don’t log in to their HR site. So if you are looking to buy a house and you have an HR site or payroll site through your company. I would check and make sure you have your login, that you have access that you know how to download a pay stub into a PDF form. Same thing with online banking. A lot of people just go onto their app. They look and see what their balance is and stuff. There is a statement tab. So you gotta go into the statements, download the statements and find a way to utilize all that. So just find out how to have access to it. And then I would download the most recent couple months bank statements, the most recent month or two of pay slips. Have those accessible. And we might need some of those updated along the way, but if you know how to do that up front and we go to ask for it again, if it takes two or three months to find a house, you know how at that point.
Eric:
As you guys are thinking about this, nothing’s super complicated. Nothing’s that difficult. But it is a lot of little steps. And so I, I always tell my clients as we’re going through the real estate process, I didn’t realize this until I got into the business a few years, but there’s really a few moments when you should celebrate. And then the rest of the real estate process is just like solving problems. So it’s like 30 problems to solve. And like three or four times to celebrate. One of those times to celebrate is when you get a letter from Jeff or his team or any other letter that says, “Congratulations, you’re pre-approved!” It’s like, yes! like that way to go! Cuz it took a lot of work to find all those files and figure out how to do the pay stub and get your employment history. And maybe you’ve been working on your credit score. So that is a time to be like, all right, now you can go out shopping. So let’s talk about that now. Now that they’ve got the letter, maybe what does that process look like from your end?
Geoff Bostick:
Once you have a letter, and there’s a common misconception, I like to kind of squish with this. A lot of people say, “Hey, how much am I preapproved for?” And that’s a complicated question. Because we don’t really preapprove you for a loan amount. We preapprove you for a monthly payment and we do talk to every buyer that comes through us and says, you know, how much is your budget? Because you might qualify for double your budget. So we want to get you on the right track for the right houses. But we don’t qualify you for a dollar amount. We qualify for that monthly payment. Then we try to translate that too. That would look like that. And we can talk about property taxes and get into all kinds of other stuff later. But you can find two houses at the same price point, that have different monthly payments. School district, state, all that kind of stuff is gonna merit in how that looks.
Eric:
And I wanna pause on that point for a minute because you know what got a lot of people into a lot of trouble in 2008, 2007, right? You were getting preapproved for these huge amounts. Which was not something that you could afford on a monthly basis and getting upside down on a house. And then when the market collapsed, that’s where all these thousands and thousands of foreclosures came from because people couldn’t afford that monthly. You’re saying your approach, which is so sound and wise is what is working with you, the buyer to understand where are you comfortable at with your budget? That’s where we wanna start. It’s not about getting a certain amount of house that you can buy. It’s where does this fit into your overall financial budget. Where you’re comfortable at. And let’s not get crazy and put you in a spot where you can get in trouble down the road.
Geoff Bostick:
Absolutely. And what we find here. And I try to use this a lot more lately is we’re in the Midwest, we’re in a lower cost housing market. But the guidelines are the same. If you live in New York, LA or San Francisco, as they are in the Midwest. And a lot more of your budget goes to housing in those areas. So somebody might make the same amount of money or maybe slightly more, but they’re by like two to three times more house. Well, I get people here that they’re like, “I want to eat out three or four times a week. When I go to target. I don’t wanna look at what I put into my card. I don’t want to think about it.” And so everybody’s, budget’s a little bit different and we don’t take into account childcare expenses. That’s your personal budget. So if you say, “Hey, I’ve got, uh, $2,000 a month I wanna pay on a house and no more.” I’m not gonna have you look at a house that’s gonna have $3,000 a month payment. Even if you can afford it by my standards. That doesn’t mean it’s gonna figure.
Eric:
That’s really good. And guys, if you haven’t watched our video already watch our cost of living video, cuz we’ve kind of broke down the expenses of Cincinnati compared to other cities, nationwide. And that is one of the huge benefits of living in the Cincinnati or Kentucky area. Is that cost of living and cost of housing is really low compared to a lot of spots in the nation. So we’ve got the preapproval and I just wanna speak on that for just a minute in terms of this market and why you need to do this before you go shopping. I’ve talked about this in another video too, is you can waste a lot of time, like a lot of time and hours scrolling on your phone on Zillow or whatever home app that you like to search your homes at. And you’re looking at the beautiful pictures and you’re falling in love with things, but until you’re, pre-approved, you’re just wasting time.
Cuz you can’t actually go shopping, cuz the status of the market we’re in right now is historically low inventory levels, which means, and you guys probably know this already. If you’ve been looking at these houses online, shame on you. But they’re going in like two days, right? They’re going for over asking price in one day, two days, three days. If you don’t go out and see those houses and don’t have a pre-approval in your hand, which by the way for team Sztanyo, we actually won’t take you out. Unfortunately, because we’re wasting our time. I don’t wanna waste your time. I don’t want you to waste my time. If you wanna go see the house, let’s make sure we’ve gone through this process so that we can actually put in a competitive offer. Because if you put in an offer without it right now, you’re kind of dead in the water before you begin.
All right. Let’s, let’s wrap this up. Geoff, what any other final thoughts on the process of getting pre-approved or things that are the Sztanyo clanyo should know?
Geoff Bostick:
It’s usually a simple process. We can turn it around sometimes an hour or two. We can get you an online application that you can just go through and answer all the basic questionnaire. Questions we talked about super quick. My team will review it. Usually within, you know, an hour of it hitting our inbox. If there’s any information missing that we need to collect, we’ll reach out to you. Or if there’s any questions that we need to fill in the gaps on. Sometimes there are some more complicated scenarios. Sometimes there might be some credit challenges and we’ll dig into of that with you and what we will kind of hold your hand. The worst we can say is “Not right now.” And that’s the other thing. If people are unsure if they can get pre-approved. The worst thing I could ever tell you is “Not right now.” And if you do X, Y, Z, maybe you can get pre-approved in the near future. So, it’s absolutely imperative to get that stuff done in this market. And it’s not all bad news.
Eric:
So it makes sense to start the conversation early, even if you’re not ready to shop within the next six months.
Geoff Bostick:
Yeah. And, I love that conversation cuz that means somebody serious about wanting to buy and they just need to know how do I do it. So it’s great.
Help in Getting Pre-approved for a Home Loan
Eric:
And you want someone who can coach you through that. So, Geoff, thank you for joining us. If people wanna reach out to you, obviously you guys can reach out to us and we can connect you, but where’s a good place where people can find you?
Geoff Bostick:
So I spelled Jeff with a G. I’m sure that’s gonna show up somewhere here, but you can reach me by phone or text at (513) 633-0504. Our website is www.rate.com/ Geoff Bostick. And all my data’s on there, all my info’s on there.
Eric:
Awesome. Geoff, thanks so much for joining us. Hope this was helpful for you guys to understand a little bit more about the pre-approval process how getting pre-approved is done, why it’s so important when to do it and answering some of your questions around it. If this was helpful for you, please like the video, be sure to subscribe to the channel guys. Thank you so much.