You are a buyer in today's real estate market, visiting open houses,
and each Realtor is asking the same question--Are you pre-approved? You
respond that you know getting a loan will not be a problem.Â After all,
you have a great credit score.Â Well my friends, a great credit score is
only one piece of the crazy lending puzzle.Â Answer yes to the
following 5 questions and then I can say that you have a strong,
legitimate pre-approval and that you are ready to make an offer.
1. Has your lender verified and sourced your down payment?Â Â
Down payment requirements vary depending on the loan program you are
pursuing.Â Remember, you will need enough money for your down payment
AND closing costs.Â Additionally, the funds in your bank accounts must
be seasoned funds or at least meet guidelines set forth by the lender.
2. Has your lender reviewed your tax returns and paystubs?
Lenders want to verify that you have current income and are gainfully
employed.Â They also want to see your past earnings.Â Many buyers don't
realize that they've taken certain deductions that can affect their
ability to qualify for certain loans.Â
3. Does your debt-to-income ratio (DTI) meet lender guidelines?
In other words, is your revolving debt vs. your income at a ratio
that is acceptable to the lender?Â If not, are there any debts you can
eradicate to help you qualify for a loan?
4. Was the pre-approval finished recently?
Pre-approvals do have a shelf life.Â Buyers' jobs, income and bank
accounts may change.Â Once you establish a relationship with your
mortgage broker or lender, you can easily update your pre-approval to
satisfy any seller's concerns about a buyer's ability to qualify.Â If
your pre-approval is old, then get back with your lender and spruce it
up.Â Update your info with your lender and you will be good to go.Â
5. Do you have a good FICO score?
This is the proxy that most buyers use to self-qualify for a loan.Â
Yes, it is important but clearly, this is only one part of the big
picture.Â Each loan program will require a minimum FICO score.Â
Furthermore, the credit report will show any potential problems that
could inhibit your ability to qualify.
My advice to those thinking about buying?Â TALK TO A LENDER OR
MORTGAGE BROKER FIRST!!!Â Find out if you can get the green light to
buy.Â If not, figure out what steps need to be taken so you can qualify
for a loan in the near future.
For a list of mortgage professionals, please feel free to email me at Gregory@GregoryMasi.com.Â For more blogs like this one, visit me at LA Distinguished Homes.