Get Pre-Qualified Now ……If You Want to BUY a House then Get OFF the Fence
1. Must I get my “Prequal Letter” before I find the home I want to buy? I have a lot of buyers who tell me they are serious about finding a home but the minute I mention getting pre-qualified, they have some excuse but….the main thing I hear is “when we find a house, then we will call your lender and get pre-qualified”. TOO LATE!
Do I see a problem here? Absolutely, as the inventory of homes for sale is so slim that a really nice home priced fairly will be in PENDING status within a day or less so anyone who doesn’t have their letter will likely lose out on the countering or acceptance process by the seller.
2. What is the qualifying process all about? It is very simple and fast but sometimes not fast enough when you wait until the last minute. Typically you call a lender that has been recommended by your real estate agent. You are sometimes given you several names, emails and cell numbers to call. The lender can take a phone application in about 5 minutes and then the rest is done on the computer. It is not a long or difficult process.
3. Does one letter work for all my offers? Probably not as most banks require the address of the property to be on the letter. Also if your agent is sharp, she/he will want the letter to have the offering price on it and not the amount you qualify for. Let me explain. You qualify for $455,000 and you want to put in an offer for $440,000. But the listing agent that presents your offer to the seller will say “look they can get a loan for $455,000 so let’s counter to that price.” I cannot tell you how many times this has worked in the sellers favor so an individual letter for each offer is so important. This is another reason the buyer’s agent wants to be able to reach the lender on the phone during the negotiation process or the buyer might lose out to someone else’s offer.
4. Do I have to stay with this lender? No, you have the right to pick anyone you want to do your loan. This process gets you started so you know what your credit score is. The lender will provide a letter, called a Pre-Qualification letter, and this will get you the proof you need to submit along with your offer to the seller by your real estate agent.
5. How do I know what kind of loan I want? The lender will run your score(s) and will ask you a few questions such as how much money do you have saved, a lot of debt, money from retirement, or gift from family. By knowing this information, the lender can tell you what type of loan will probably be the best; FHA, VA, Conventional, etc
6. Does the Lender tell the Real Estate Agent all my personal credit information? Absolutely not! Usually the lender sends me an email saying we are good to go and will have the letter soon or might say we need to work on something so maybe in a week or so. Does the real estate agent need to know? No, if it is me I just say thanks and keep me informed. Usually the client then calls and wants to talk to me about it but the relationship between the lender and the buyer is confidential unless the buyer waives it.
7. Are you planning to withdraw some of your retirement from your fund for the deposit? If so, you need to call and discuss the terms they will allow you to get some of these funds; terms, amount, type of loan.
8. What is a FICO score I keep hearing about? There are 3 main credit reporting companies (Equifax, Experian, and Trans Union) and each provides a monthly score on anyone who has credit. You might have your credit run and come up with a 689, 701, and 712. Your FICO score will be 701 as you can see it is the middle score.
9. Should I pay everything off? Absolutely not! Ironic as it is, if you pay off several bills, your score will take a 20-30 score drop and then you will have to wait 30 days or more for your credit score to go back up. It is better to continue to make payments monthly as this shows you are paying timely and have a good payment history.
10. Can I charge some furniture for my new home that is in escrow? No, if you buy furniture on credit, the company immediately reports this debt to the credit companies and it will show up on your report. When the Mortgage Company does their final check just before approving the loan, they will see this new debt. It may have just reduced your FICO score below where it needs to be and your Debt Ratio may have gone up to high so now the person approving the loan (the Underwriter) will decline the loan completely. Wait and you can buy the furniture right after the escrow closes.
11. What is my DEBT RATIO is too high? If your debt ratio is too high, (meaning you owe too much on credit vs. what you earn) you will not qualify for the loan, the lender can assist you in paying down your debt. Sometimes this takes a few months and then you are ready to buy your home. This is one of the reasons you need to start the process in the beginning and not after you have looked at homes and found the perfect one.
12. What if I paid off a debt and it is still showing up as “Unpaid”? This is a good reason why you need to check your credit in the very beginning. The lender can help you get this removed from your report or at least corrected as PAID. Normally a letter to the company will take care of the problem. The time period can vary since you are dealing with 3 credit reporting companies, maybe two will fix it within a week and the third one will take a month. Need to check before you are ready to buy especially if you suspect there might be something negative on your report. If not, call a supervisor and go that route…but be nice. Remember it is easier to get someone to help you if you are pleasant instead of yelling at them.
13. I have a common name and that is not my debt? This is something the lender can assist you with and the sooner the better. You will need to get this removed and it takes a month or more sometimes. I have seen debt errors that belong to a twin sibling, a parent or your adult child with the same name. Also if you have a common name (Brown, Smith, Jones, Martinez, and Gonzales) it can just be an error and need to be corrected. Again this takes time!
14. Why should I use one of the lenders that my agent recommends vs. a friend of a friend? I have seen so many loans go bad just before closing, get delayed, or change the terms which causes the buyer to pay more money to close from “friend of a friend” lenders. Typically your agent has worked with some great lenders and some not so great lenders. Which one do you want? Your agent will probably give you a few names and you can call them all and ask questions. If your agent has had good experience closing deals with these lenders and your credit is good, it is a 99% chance that you will get your loan and will be living in your new home within 30-45 days from now. As I mentioned earlier, you make the decision so if you change lenders for whatever reason, it will probably be fine as there are so many great lenders.
15. What is a benefit of using a lender that your agent knows? Your agent may have a good working relationship with the 5 or 6 great lenders and can call and say we need to move on this fast so can you put some pressure on the UW (underwriters desk) to move this along? Sure is probably going to be the answer vs. there is nothing I can do or even worse, they just do not answer the phone or return your emails.
16. Do you want an M-F lender or a lender that answers their phone on the weekend? Normally a real estate agent has working relationships with lenders who work on the weekends so if you have a burning question, the lender will answer the phone and help on Saturday or Sunday.
17. I have a Child Support order so can I still buy a home? Yes but this takes 30 days or more so it is good to know so your agent can ask for 45-60 days to do the loan. The mortgage company just sends a letter to the Support Division to make sure the person has been making their payments. This shows that the buyer is a responsible person who does not try to get out of a debt.
In summary: Get this process moving fast as soon as you talk to your agent. That way once you find the house you truly love, you can easily submit your offer and feel assured you will stand a good chance of getting the offer accepted. It is good when the agent refers a few lender names, there has been some working experience here and everyone can rest assured the loan will go smoothly.
If you are truly almost ready to buy that new home, call your agent today and get that prequal letter right now as it will be good for 90 days and can be updated when needed.
Get off the fence and get moving on your Prequal letter so your loan will go smoothly and their will not be any delays. You want to hear those magic words…”Your property just recorded so let’s meet at the property so I can give you the keys to your new home.”
Good Morning Mr. & Mrs. Buyer, I have your keys!
I sell real estate in Riverside and San Bernardino Counties; Loma Linda, Redlands, Highland, Colton, Yucaipa, Fontana, Rancho Cucamonga, Ontario, Upland, Montclair, San Bernardino, Lake Arrowhead, Crestline, Twin Peaks, Palm Springs, Palm Desert, La Quinta, Rancho Mirage and all other cities in California. I am a trained and experienced Short Sale agent. If you are looking for a professional and experienced agent, I am just a click away. Google me at Kristin Hamilton-Real Estate Agent. Homeowners and Buyers both will find my services top notch and successful. I can sell your home; both traditional and short sales.
I am waiting for your call! 909-557-6966. Google me at Kristin Hamilton.
My name is Kristin Hamilton and I sell Real Estate. Call me for all your real estate needs. If you want to sell your home, call Kristin @909-557-6966 or email me at kristinhamilton@kw.com.
This post was authored and or picture was taken by Kristin Hamilton. ©2012, All Rights Reserved, This content may not be reproduced or reprinted (Except for ActiveRain Re-blogging) without express written permission of Kristin Hamilton, Keller Williams Realty, Redlands, CA.
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