It is always one of the first conversations any real estate agent will ask: “Are you pre-approved?”

“Getting pre-approved by the bank is like eating breakfast. It just makes the rest of the day better.”

Toby Boyce

Breakfast is the most important meal of the day according to years of experts. And for many reasons the pre-approval or initial discussion with the bank is the most important part of your real estate transaction.

Are you looking to learn about a commercial loan or a residential loan?

Your Banker, Your Fighter on a Commercial Loan

Anyone that has applied for a commercial loan, knows that the “pre-approval letter” is a myth in this world. However, a good commercial lender – like the ones listed below – can take your financial documents and in a personal interview figure out your goals and aspirations and determine the bank’s comfort level with your project. That comfort level will directly corelate with how much they are willing to commit.

It is important to have them on board long before we find that property — usually happening at the same time you begin meeting and interviewing real estate counselors. Talk to several different banks and find a lender that you are comfortable with.

At community-minded banks, there is still a loan committee that meets once a week and discusses the majority of the loans that the bank is considering. So your lender is more than just a face, but becomes the face of your dreams. She is the one standing in the committee room as your ambassador and the stronger the information she is armed with the more likely you are to get the loan.

Featured Commercial Lenders +

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For Those Looking to Buy a House or Condominium

While the commercial world is focused more on the property and what you can do with it — the residential process is a lot more focused on you. You’re going to want to have a solid credit score, at least 3% down payment, and documentation for your income when you reach out to the residential lenders – like the featured ones below. Or be prepared to have a plan to achieve these items.

You’ll provide your tax returns, 1099 or W-2, and some other information to the lender and they’ll generate what is called a pre-approval letter which carries a lot more weight than a pre-qualification. The biggest difference is that in the pre-approval they’ve received some documentation and pulled your credit to verify your ability to purchase the property. While a pre-qualification they just take the numbers you provide and say “you can qualify for $x.”

But if you exagerated your numbers it can change the interest rate, or the ratios they use to come up with a maximum number and it will change how much you can afford.

The pre-approval process should begin early in the process. A lot of times it starts about the same time as you select a real estate counselor, but can be done — or even switched if needed — later if the need arises. If you are a 1099 employee, I would suggest starting very early … like maybe now if you want to buy in the spring. They need a lot of information and sometimes it requires you to go back not only in your files but to previous clients to get verfication.

But it is worth it in the end when you have a strong pre-approval letter that the lender can say has been already cleared a lot of the hurdles that can come up in the financing stage.

Featured Residential Lenders +

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Local, Local, Local

We always recommend going with a local lender that serves your community for your project. Their commitment to you is also a commitment to the community in which they serve.

I’ll beat this horse until it is good and dead. Choose vendors that are committed to your neighborhood because they are the ones that are sponsoring your kids baseball team — but also are the backbone of the local economy. I’ll get off my soap box for a bit, but you’ll read a lot about being local, local, local.

+ – Featured providers are a service to our clients and we provide referrals to outside companies. Recommendations are from Toby’s experience meeting and networking – or in some cases personally working with them on his own home. A few of these affiliates may have an association with Coldwell Banker Realty, however Toby receives no compensation for them for transactions. Though he believes you’ll have a good experience with all the vendors, that cannot be guaranteed.