Can’t I Find My House First…..and then Get Pre-Qualified afterwards?
Buyers ask this question all the time and it does seem like a sensible idea but the answer is NO.
Buyers start looking months ahead of time and this is when they need to make sure they do not have any negative items on their credit report. Because if there is something there, a lender or credit repair company can assist getting it removed or the comments changed.
Items that can cause problems when you try to get a loan.
1. Late payments; 30-60-90 days
2. Too many credit cards-These may be old cards that you have not used in years but they are still open and the credit reports add the maximum amount you qualify for on all the cards.
3. A high debt ratio-This means you have too many bills versus your income. If you need to pay off some bills, the earlier the better as your FICO score will go down just after payoff but will come back up within a few months.
4. An old debt that you paid off is showing up late, as a judgment, or liens against you.
5. There can be mistakes that need to be removed; debts that are not yours.
6. Child Support Liens.
What you need to do 6 months before you want to buy a house.
1. Have a mortgage counselor run your credit and check for above mentioned items.
2. Know what your FICO score is so if you need to get it higher, the lender can advise you how.
3. Make monthly payments for 6-12 months to get your credit established.
4. Do not pay off debts as it will lower your FICO score unless the lender tells you to.
5. Write letters and call any creditor that have put something negative or in error.
6. Have a credit repair company assist you in cleaning up any problems.
7. Do not switch jobs as your time lines are very important.
8. Do not charge up a lot of things; cars, furniture, live on credit cards. Instead try saving money and budgeting.
What you need to do 1 month before you want to buy a house.
1. Have your lender run your credit again. DO NOT shop lenders. If you do not like what they tell you, the answer is not to keep checking with different lenders to try and get a different answer.
2. Discuss this with your Realtor as they can give you ideas, recommend lenders to help.
3. If you have a good credit report, your Realtor will want you to get a letter from them called a Pre-Qualification letter. This letter is so important. It tells any sellers that you have had your credit checked and you are a low risk and the letter will give an amount and type of loan you qualify for. Having this letter makes the difference a lot of times as to whether the seller accepts your offer or not.
4. Your Realtor and or lender will tell you how much money you need to get your loan; called Closing Costs. Most sellers’ agents require a bank statement showing you have this in the bank. So make sure you are saving your bank statements. Also when you start the loan process, the mortgage company will want your last 3 months statements and all the pages (do not throw the back pages away).
What is my FICO score?
1. There are 3 credit reporting companies so when the lender runs your name and SSN; they will get a score back from all 3 companies.
2. So if you scores come in at 689, 711, 729….your FICO score will be the middle one…711.
3. Your FICO score is so important as when you decide what type of loan you want to do and how much money you have saved, there are minimum FICO scores required. This is why you want to save money and get your FICO scores as high as possible.
Go searching for your new home with your Realtor.
1. Give your Prequalification Letter to your Realtor along with the bank statement showing proof of closing costs and down payment required.
2. Since you have done your homework and taken care of any negative issues you are now ready to buy your house and shouldn’t have any problems.
3. DO NOT HIDE any negative issues like Bankruptcy or Foreclosures as they will show up later and can cause the whole deal to fall apart. Make sure to pay all your current payments timely.
4. Find your house, get your offer accepted, work with the lender to get your loan and get ready to move into your new home. REMEMBER…Do not buy any big items right now like a new car or furniture. Wait until your loan has been approved and funded. Then you will be ready to move into your new home. SOLD!
I sell real estate in Riverside and San Bernardino Counties; Redlands, Loma Linda, Highland, Colton, Yucaipa, San Bernardino and other cites too. 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. Call me to sell your home.
I am waiting for your call! 909-557-6966.
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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