By Syd Johnson
The real estate market is soaring because of low
interest rates that have brought home buying to average
Americans. All over the country, more renters are
buying and homeowners are upgrading their properties.
In this hot seller’s market, a pre-approval
letter from your mortgage lender can help you secure
a winning bid on the home of your dreams.
A pre-approval involves much more than filling out
a questionnaire. It is essentially going through the
entire mortgage application process and having the
lender give you an exact figure of how much money
they are willing to lend you and at what interest
rate. Having the letter is like having the cash in
the bank. This shifts your focus from financing to
getting the best real estate agent and finding the
best home that you can afford.
Pay attention to the terms of the letter before you
start shopping for your home: What terms did your
mortgage lender extend?
A simple prequalification where they took down your
information and made an informal guess of what type
of loan you will receive is usually not very effective.
This basic prequalification of course is subject to
running a full credit check, full disclosure of your
assets, and no drastic changes in your financial situation.
Any lapsed payments on credit cards, student loans
or a job change, can give your mortgage lender sufficient
reasons to back out of the deal.
Here’s how to get the maximum benefits out
of the pre-approval
process:
1. Start by using the resources on any major search
engine. Look for “mortgage lenders,” “home
loans,” or “pre-qualify for a mortgage”.
2. Fill out an application and make sure it goes
through the underwriting process. If you’re
not sure, call the lender using their customer service
number and ask them what happens after all the information
is submitted.
3. Find out if there are any fees involved for pulling
your three bureau credit reports, and for the underwriting.
Some lenders will charge the fees up front and others
will wait until you are approved for the loan.
4. Fill out any extra paperwork such as proof of
employments and statement of your resources. You have
to prove that you enough cash on hand for a down payment,
unless you are getting a no money down home loan.
Also, you have to prove that the cash is yours and
not a loan.
If you want to a loan from your parents for example,
try to get it six to eight months in advance and keep
it in your savings account. Otherwise, it will count
as a debt and could increase your debt to income ratio
and have the opposite effect; showing that you don’t
have any cash and disqualify you from a much bigger
loan.
5. Get a pre-approval letter from the lender stating
the exact amount of the loan that you will receive
and the interest rate.
6. Pay attention to the expiration date on the letter.
If you are in a market such as Southern California
where competition is particularly fierce, make sure
you have the most flexible expiration date that your
lender will allow.
Whether it’s 30 days or 60 days, get it stated
in writing. If you lose out on your first or second
choice for a home (typical), you won’t be stressed
to settle for anything just to get a house.
About the author:
Syd Johnson is the Executive Editor of RapidLingo.com,
a Financial Solutions Website. You can see more articles
at http://www.rapidlingo.com This article may be freely
distributed as long as the author's bio is included
with an active link to http://www.rapidlingo.com
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