Let’s face it, buying a home can cause some anxiety, but it doesn’t have to. The more you understand about the financial aspects of buying a home and the process you’ll go through, the smoother the transaction will go. But that understanding depends upon working with knowledgeable professionals who will take the time to fully explain everything.  It is my intent with this Post to provide prospective Buyers with the necessary information to begin this process.

There are three very basic, but in my opinion the most important steps that any Homebuyer, but especially First Time Homebuyers, should take when they begin to look for a house.

Opt Out - In my Opinion, the first step in obtaining a Mortgage is for the Buyer to “Opt Out” from having their Credit information sold to Lenders who are purchasing lists from the three National Credit Bureaus. It is very important that a Buyer do this as soon as they consider purchasing a home.  In the next step we will see that in order to get Pre-Approved for a Mortgage, a Loan Officer will have to pull the Buyer’s Credit.  When the Loan Officer does this, the information that is submitted will be collected by the three National Credit Bureaus, Equifax, Experian, and TransUnion. Once these Bureaus have the Buyer’s information they then make it available to any Lender who wishes to purchase it.  These lists are referred to as “Trigger Lists”.  This means that within 12 to 24 hours of the Buyers Credit being pulled, these bureaus are taking the information that they gave to a Loan Officer, and selling it without their permission to other Lenders.  In order to prevent this, a Buyer needs to “Opt Out” by calling (888) 567-8688 or go online at  www.optoutprescreen.comThe Buyer can choose to “Opt Out” for a five year or a lifetime option period.  A Buyer needs to do this right away so that when a Loan Officer runs their Credit, these Bureaus will of already have been notified that they have chosen to “Opt Out”.  For more information on this read on of my other Post “Are TRIGGER LISTS Putting Us and Our Clients At Risk???”

Get Pre-Approved for a Mortgage – The second step in purchasing a house, should be to contact a Lender.  A Realtor will most likely not take a Buyer’s to see houses unless they know that the Buyer is a qualified Buyer.  This is important because both the Buyer and the Realtor may just be wasting each others time if a Buyer does not qualify for a Mortgage, or qualifies for the Mortgage, but not for one in the price range that they have been looking at.  So for me this is the next step.

Once a Buyer has contacted a Lender, a Mortgage Professional will proceed to go through the “Pre-Approval Process” by identifying the Buyer’s ability to purchase a home, and establish the  Purchase Price Limit that the Buyer qualifies for.  In order to do this a Loan Officer is going to have to check the Buyer’s Credit, take a full Loan Application, and submit the Credit and Loan Application through their Automated Underwriting System.  It is important that they take all three of these steps, because it is the ONLY way that a Buyer can be reasonably assured that they will qualify for a Loan.  Once the Credit Report is pulled it will provide the Loan Officer with all of the Buyer’s revolving debt, which will have to be taken into consideration in determining what they can afford. The Credit Report will also show the Buyer’s payment history, and Credit Scores.  The Loan Application will include the Buyer’s Income, Residency, Employment, and Bank Information.  Once all this information has been submitted, the Automated Underwriting System will determine if the Buyer is qualified to purchase a house within the desired price range.  However, this approval is not a Mortgage Commitment, a Commitment can only be given once there is a Sales Contract on a property, and documentation have been collected to verify the information that the Buyer gave to the Loan Officer.  A Property Appraisal will also be done at this time to determine if the property is worth the price that the Buyer has agreed to pay.

Once this has been done, the Loan Officer can provide the Buyer with a Pre-Approval Letter for them to provide to a Realtor.  If the Buyer is not working with a Realtor, the Loan Officer will be able to provide them with a list of “Trusted Professional Realtors” that the Loan Officer works with for them to choose from. If a Loan Officer does not do all of this, then the Buyer needs to contact one that will.  Without following this procedure, all that the Buyer will have is the Loan Officer’s opinion and nothing more. 

Finding a Realtor – If you started this process with a Loan Officer this is the third step in the “Home Buying Process”, but this could have easily been the second step. For this step I would recommended that a prospective Buyer read the following two Post on how to select a Realtor  “Adventures in 1^st Time Home Buying: “Top 10 Traits of a Great Agent, Part 1”  and   1^st Time Home Buying: “Top 10 Traits of a Great Agent, Part 2”  I also recommend reading  “Adventures in 1^st Time Home Buying: Exchanging Your Vows”  Between these three Posts a Buyer will be well informed and armed on how to go about selecting a Realtor and what transpires during that process

Once a Buyer has done these three steps they are ready to purchase a house, sign a Sales Contact and obtain a Mortgage, but it all starts here first.

********************************************************************************************

Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com