I created this blog to have a place to share information, ideas, thoughts, and experiences, not necessarily just about real estate, but also life in general.

November 15, 2012

Get Pre-Approved By A Lender. Step #3.

Get Pre-Approved by a Lender. Step #3
Get Pre-Approved!
Ahhh, the thrill of buying your new home! About 90% of buyers start on Internet for information and properties. It is a good first step and most websites have “calculators” to show how much loan or price range of homes you can afford.

However, when you finally decide to buy your home and you need to secure financing, the best way is still the traditional "meeting in person" who will be handling your loan transaction for the largest investment you’ll probably ever make in your lifetime.
Finding a loan officer.
Your real estate agent is ideally your most reliable source. Realtors are in constant communication with lenders through their current transactions, past clients, and networking with financial institutions, such as banks, savings & loans, mortgage bankers and brokers, and credit unions.
If you haven’t hired a realtor, get recommendations from your local bank, friends, colleagues and people you know. I strongly recommend not using the internet or yellow pages to find one. It’s too much risk for such a large investment.

Determine how much you want to pay.
Keep in mind: Your lender decides the amount you can borrow but you ultimately decide what you can afford. Nobody knows your style of living and spending habits as well as you do.
Most lenders base their decisions on debt ratios, loan to value, FICO scores, and compensating factors. Your loan officer will guide you through the application process. They will carefully analyze your financial profile and recommend the loan amount and price range you can qualify for. Most loan officers are available on evenings and weekends or maybe even meet with you at home.
Don’t hesitate to provide documentation they need. Confidentiality ranks high on their priorities. The accuracy of the loan amount they can approve for you is as accurate as the information you give them.

Some things you want to have ready when you meet with your loan officer:
  • Latest W-2 forms or Federal Tax Returns (for self employed)
  • Most current pay-stubs (for salaried income)
  • Proof of down payment (such as copies of bank statements, etc.)
  • Installment loans (example: Car payments, personal loans)
  • Revolving credit (like credit cards, equity loans)
  • Student Loan payments
  • Child or alimony support (whether you are paying or receiving them)
  • Bonuses, overtime pay, part time jobs or non-traditional sources of income may help to establish and strengthen your financial profile.
Understand the loan programs and interest rate structures your loan officer presents. Ask questions and have them clarify terms (this industry has so much jargon, even I am constantly asking for clarification or explanation).

You most definitely want a Pre-Approval or a Lender’s Loan Commitment letter to present to the seller when you make an offer on your dream home. It may take several days to get this from your lender as they will need to obtain your credit report and verify information you have provided on your application

NOTE: Being pre-approved is different than having  been pre-qualified, in that, being "pre-qualified" usually means the loan decision was based solely on information provided by the buyer which has not been documented nor verified, and in most cases, a detailed credit report have not been obtained.

Getting a lender approval for your financing is crucial in buying a home. You don't want to spend time and energy searching for your dream home, only to find you can’t qualify for the loan to purchase it.
But once you’ve gone through the “pre-approval” process, you are now armed with the knowledge and confidence of having the guidance of real estate professionals whom you can trust to be looking out for your best interest.

NOW, YOU ARE READY to embark on the most exciting part, finding and buying your new home!

NEXT: Make A List . Buying A Home Step #4

No comments:

Post a Comment