As a potential home buyer, there are several things you can do to be better prepared to go home shopping and to make yourself look like a strong buyer, one that a seller will not want to allow to slip away. Here are several suggestions:
- The first thing you should do is talk to a good mortgage lender to establish the maximum purchase price you can afford. This will be dependent on your credit history, your income, the money you can use for a down payment, and your debts. This initial phone conversation with a mortgage company can result in your obtaining a letter stating that you are "pre-qualified."
- If there are any problems noted on your credit report, ask the loan officer what you can do to get those items removed from your credit report.
- At this point, you are ready to call a Realtor and talk about your seeing homes. However, to be a better buyer, you should go ahead and formally make your loan application. The lender will verify the information you have supplied and submit your loan to an underwriter to obtain approval. This entire process takes a couple of weeks and results in your receiving a letter stating you are "pre-approved" for the loan. Sellers welcome offers from pre-approved buyers because they know there is a greater likelihood that the sale will result in a closing.
- Provide your Realtor with a copy of your per-qualification or pre-approval letter so that he may use it to your advantage when he sells the seller's agent on your strength as a buyer.
- When you are writing the sales contract, your agent will ask you how much earnest money you want to put with your contract or may recommend an amount. The customary amount is roughly 1% of the sales price. My recommendation is that you offer twice that amount. This costs you nothing because this money is a credit to you at closing, but it shows the seller you are very serious about buying the house. This strong showing of good faith may cause the seller to accept something else in the contract to which he may have otherwise objected.
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