I would like to talk to you today about the importance of getting pre-approved for a loan prior to your home search. There are really two reasons for this.
The number one reason is that it is the only way to know what you can afford to purchase. If you have never purchased a home, you are especially in the dark. When you apply for a loan they will take into consideration all income and all bills, and then tell you what you can afford. Once you have this information, you can start looking for homes within a price range that fits your budget. Yes, this may burst your bubble. You may find that you can't afford what you initially thought. Or you may find that you have some credit issues you were not aware of. Now would be the time to clear these matters up. You can put the brakes on, temporarily, and save more of a down payment in order to afford a nicer home. Or, you can take the time to repair the credit issues so that when the right house comes along you are ready for it. The surprise may be good when you check your credit and you may see that you really can afford more than you thought.
Imagine making an offer on a home and then finding out your credit is not up to par, or that you simply cannot qualify for the home you just made an offer on. Talk about embarrassing. And, what a waste of time for you, the realtors involved, the loan officer and the sellers. You could possibly be so far into it that you lose money on an inspection and an appraisal, and other costs which could add up to $1000 or more. This would be non-refundable, and a big loss in your financial plans.
Also, know the difference between a prequalifying letter and a pre-approval letter. On a prequalifying letter they take what you give them and run numbers without verifying anything. A preapproval is when your credit is checked and all of the information you have supplied to the loan officer is verified. A pre-qualifying letter just states that the bank is taking your word for it, and a pre-approval letter states that they know for a fact that you are able to purchase the home you are looking at. Which do you think looks better?
The second reason you need the pre-approval letter is to make it available for submittal with the offer to purchase contract for the seller to review. What do you think they see when they look at one of these letters? With no letter are they excited about your offer? Maybe not, especially if there is another offer on the table and the second one has a pre-approval letter. Even if the other offer is not as strong as yours, it may be accepted over yours simply because of the proof that the other buyers are more ready to move forward. Your position looks weaker. These days some sellers will not accept an offer without a letter of approval. This will negate your offer right off the bat.
So what is the point of all of this? Save face by not finding a rejection letter from the bank after you make the offer. Make your offer look strong to the seller after all that searching. You don't want to lose the house you searched so hard for.
If you want to be prepared prior to going to a bank you can check and print out your credit report for free. There is only one place that is absolutely free and sanctioned by the government:
It gives you reports from all three of the credit bureaus and for a small fee will also give you your FICO score, which is recommended. Print all three out along with the FICO score for each, and then sit down and look at everything on it. It will show you any derogatory information. This is what you need to look at and correct right away. It should give you the name and addresses, and maybe the phone numbers to contact so that you can start talking to anyone who has anything negative on it. You can talk to your banker about what you can do to correct these issues. They can also discuss your FICO Score with you and explain what that means.
Applying for a loan is simple and only takes a few minutes in most cases of meeting with a loan officer. They will take your information and then in a few days get back to you with the information you need. Once you make the offer you will need to get the underwriters approval. But that is the next step in buying a home. Finish this step first.
Your loan officer can help you pick the best loan program for you. This person should be someone you can really connect with, and feel comfortable discussing your private finances. If you have never applied for a home loan, or if you are new to the area, here are the names of some local loan officers that I would recommend:
Darren Cochran, Countrywide Bank in the Keller Williams Building, 404 South Main Street, Hendersonville NC 28792 Cell: 828-275-7575
Karen Ball, Home Mortgage Consultant, Wells Fargo Home Mortgage, 2754 Brevard Road, Horse Shoe NC, 28742 (828) 890-2371
Susan Eubanks, Home Trust Bank Loan Officer, 228 6th Avenue East, Hendersonville, NC 28793 (828) 698-7953
Good Luck on your search! Please let me know if there is anything else I can do for you.
Keller Williams Realty, Mountain Partenrs
404 S. Main Street
Hendersonville, NC 28792
Jerri McCombs, Advanced Virtual Assistant
828/553-5190 or info@JerriMcCombs.com