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Be ready!

As a mortgage professional, I work with many real estate agents who refer clients to me. I also have many past clients who are now looking to buy a bigger home, or they have someone in their family who they have referred me who is looking to buy a home for the very first time.

Everyone’s telling me the same thing: Properties that are priced right are selling very quickly, sometimes even within hours. My real estate partners are telling me that there is a lack of inventory right now, which can lead to bidding wars on properties, leaving many potential bidders frustrated.

What can buyers do to make themselves stand out from the crowd? Get approved for your mortgage before you bid!

It’s common for me to supply a buyer with a pre-approval/pre-qualification letter to accompany someone’s bid when they put in an offer on a property. A pre-approval/pre-qualification letter states that I have run a credit check and calculated income and assets to determine if the buyer has a good chance to get a mortgage. Most pre-approval/pre-qualification letters also state that this is not a mortgage commitment and that income, assets and employment have to be verified prior to an actual mortgage commitment is issued.

What I am doing for my clients now is having them get a mortgage commitment (full approval) and not just a pre-approval. Applying to get a mortgage commitment means signing all of the application documents and supplying us with your financial documents (tax returns, W-2s, pay stubs and bank statements), verifying your employment, and verifying your assets. We package this all together and send it off to one of our lenders to have the file approved by an underwriter so that I can issue a mortgage commitment to the real estate agent when he is putting in a bid on a property. This is very powerful.

This puts the buyer in a better position than his bidding counterparts. It shows that he/she has gone beyond the short pre-approval/pre-qualification process and gotten approved, which eliminates a lot of unknowns for a seller and a seller’s agent.

There is always a risk that a buyer may not earn approval even if a pre-approval letter/pre-qualification letter has been issued because the verification process has not been started or completed. But once a lender issues a mortgage commitment, it means that we have already gone through the formal process and that there should be no surprises.

Usually there is no charge outside of a credit report (under $30) to do a full application, and it puts you in the driver’s seat when you put in your bid. Not all lenders will do a full application without a property, but there are a few, and they are very busy this buying season.

For more, call 773-557-1000 ext. 15, e-mail ron@ronmortgage.com or visit www.ronmortgage.com.

About Ron Ricchio

Renato (Ron) Ricchio is president of Chicagoland Home Mortgage. He grew up in Westchester and attended St. Joseph High School and DePaul University, taking a job as a loan officer in the mortgage industry soon after graduating with a bachelor's in finance in 1991. He started his own company in 2001, which he operates today. He has been ranked in the top 150 loan originators in 2010 and 2011 by Origination News. Ron is happily married with three beautiful children. A board member of San Francesco Di Paola Society and the founder of Ricchio Family Toy Drive for Lurie's Children's Hospital, he enjoys cooking and spending time with family and friends.

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