Home Buying in Southern Colorado: The What and Why behind Prequalify
What does prequalification mean?
Getting prequalified means you have a lender who will write a letter saying you can afford to buy a home up to a certain amount. It generally starts with a phone call to a good lender. They will ask for your social security number, how much debt you have, what your earnings are and with that basic information will be able to prequalify you on the phone. Ask the lender to send your realtor will need a copy of the prequalification letter.
Why prequalify?
The prequalification is necessary for two reasons. One, your agent will have a better feel for what you can afford. Two, s/he can tell the seller's agent when you two write an offer that you can afford the house. A good agent won't let you make an offer without prequalifying, to protect you.
What is preapproval and how is it different than prequalifciation?
Preapproval is much more rigorous and, accordingly, much stronger. A preapproval letter means the lender actually has your documents that support the information you spoke to him/her about on the phone. Only do this, however, if you are sure you want to work with that lender because it is work to get all the documentation together.
How do I start?
Your first step is finding a good lender, someone who will communicate with you on a regular basis and who will communicate with your lender on a regular basis. You want a lender who will listen to you and answer all your questions. Many a transaction has failed because the lender was not in constant communication with the realtor so that dates or terms can be changed as needed on the real estate contract.
When do I take care of prequalification?
Get your prequalification done after you find a good realtor to be your advocate. Your realtor will have a handful of lenders that have consistently done a good job for her clients. If you have someone you would like to try, let your realtor know so s/he can call that lender to make sure that communcation is at the top of the list, both with you and your realtor.
I can buy with cash. What do I need for that?
You will need a note from your banker indicating you have the cash to buy the home. All you have to do is call your bank and tell them you need a proof of funds letter for the amount you have determined you want to spend. Again, your lender will use this information to let the seller's agent know you have the funds to buy the house without disclosing how much you have.
Your lender, realtor and you are an important team. Make your home buying less stressful by choosing well.
I have an entire series for buyers. Choosing a lender would be a good place to start of will connect you to the other blog posts about buying.
Are you ready to start looking? Several areas for Real Estate in Southern Colorado can be found below. If you cannot find what area you are interested in, let me know and I will make sure you get that information or hook you up with a good realtor who you can trust.
Home Buying in Southern Colorado: The what and why behind prequalify
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