Originally posted at My Fishers Blog on Jan 24th, 2011
To make your offers as strong as possible when buying a home for sale in Fishers, having a pre approval letter helps. Along with the offer, the seller likes to see a 1% earnest money check and the pre approval letter from your lender. It gives the seller some assurances that you (the buyer) have talked with a bank or mortgage company and they upon their initial review of your financial situation....approve you for the purchase.
How do you get a pre approval letter? This is a great question! You can contact the institution you bank with or you can call a mortgage broker who looks for the best loan package for your situation. In either case they will need the following documents:
- Personal information, names, addresses, dates of birth, social security numbers; this enables them to pull your credit.
- Employment and income which is usually done through pay stubs, but if you are self employed a tax return will work.
- A summary of your liquid assets such as savings, checking, investment accounts.
The loan officer will also want to meet with you to discuss your goals. Maybe you have cash but you want to preserve it and so a 3.5% down program would work best for you. Maybe you are very debt adverse and so a 15 year mortgage appeals. Maybe you want to have the lowest possible payment long term so buying the rate down would be helpful. Or maybe you want to avoid PMI insurance and so putting as much cash down makes the most sense for you.
Many buyers feel that pulling their credit is a bad thing. If you are having your credit pulled for a mortgage, a car purchase, a credit card, etc...that could be detrimental. But just pulling for a mortgage is inconsequential. Any pulls of credit for this purpose is reset after 60 to 90 days.
One tip I tell my buyers is to only put the address of the home you are considering in the pre approval letter. This guards your information in the negotiation process. For example, you wouldn't want to bid $140,000 on a $155,000 home and then have the pre approval letter say that you are approved for $155,000. That is inviting the seller to counter you!
If you have questions about the buying process, I hold a first time home buyer class in Fishers every month. I have a lender, a home inspector and myself talk about questions like these to educate buyers before they begin the process. You may not be ready to buy for several months, but it might be good to come to the class to understand what things you will need to have in place to make the process easier and ensure you get the house you want. The first time buyer class does require registration, but it is free!
In addition if you think you have credit issues, I am part of a group that is having a seminar on FICO Scoring 101. You will be able to learn how short sales, foreclosures and bankruptcies affect your credit score; the best way to handle debts and collections, ways to rebuild credit in record time. Contact me directly for more information on the FICO class. It is free!
Have other questions about buying a home in Fishers, check out our Top 10 Buyers Questions to see if we answered yours!
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Cindy "in Indy" Marchant - Fishers Real Estate Agent
Keller Williams Realty Indy Metro NE
Fishers IN Real Estate Website
317-290-7775
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