![]() The down side is that you may pay application fees to cover the lender's paperwork in verifying your employment, income, assets, debts and credit rating. With most other purchasers, sellers must tie the house up on a contract while waiting to see if the would-be buyer can really obtain financing. Pre-approval makes you a strong buyer, welcomed by sellers. It means that you have in hand a lender's written commitment to put together a loan for you (subject only to the particular house you want to buy passing the lender's appraisal). Obtaining mortgage "pre-approval" is another thing entirely. Mortgage brokers, or a lender's own mortgage counselors can also calculate the same sort of informal estimate for you. This process includes analyzing your income, assets and present debt to estimate what you may be able to afford on a house purchase. Pre-qualification and pre-approval on a mortgageĪ real estate professional can help "pre-qualify" you for a mortgage before you start house-hunting. Even if you've been pre-approved for a mortgage, that approval is subject to last-minute evaluation of your financial situation, and a spending spree for appliances, furniture and other goodies intended for your new home may wreck your chances for buying it. Monthly payments you're obligated to pay will be counted against you, and reduce the amount of the mortgage loan you'll be offered. TIP: Hold off on making any major credit card or car purchases while you're waiting to apply for a mortgage.Don't just cut up your extra cards officially cancel them, and do it now so there will be time for the news to reach the credit bureaus. Too many inactive credit cards with significant credit limits could keep you from obtaining a mortgage loan. If you have an inactive credit card with a $5,000 limit, even though you owe nothing on it, some mortgage lenders will consider that a potential future debt. TIP: Officially cancel inactive credit cards.Adverse credit information is not supposed to be reported or included on your credit report after seven years (except bankruptcy information, which can be reported up to 10 years). TIP: Make sure that any outdated derogatory entries are deleted from your credit file.Credit bureaus are required to help you straighten things out in a reasonable time (usually 30 days). If such items appear, write a letter to the appropriate credit bureau. You may see disputed items, in addition to errors caused by a faulty social security number, a name similar to yours, or a court ordered judgment paid off that hasn't been cleared from the public records. ![]() Straightening out any errors or disputed items now will avoid troublesome holdups down the road when you're waiting for mortgage approval. As part of your initial game plan, you should: Check your credit ratingĮven if you're sure you have excellent credit, it's wise to double-check at the outset. Doing some preliminary planning before you begin your home search will make the entire process more manageable and less overwhelming. Service first should be the motto of the professional you choose with services going above and beyond what you expect and need. The person you choose should listen to you and be interested enough in you to find out about your housing needs and preferences. Choose a professional who specializes in residential real estate and who has specific knowledge of the local real estate and mortgage markets. You should commit yourself to working with one sales associate who can learn your likes and dislikes in homes to make your home-buying process easier. If you're thinking about buying a home, you'll want to carefully choose the real estate professional you work with during the process. Here's a list of tips to help make your home buying experience more pleasant. Buying a new home is exciting, but it can also be overwhelming. ![]()
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