Do I have to be pre approved to buy a home?

Asked by Pat, Indianapolis, IN Thu Jan 31, 2008

I bought a car recently, and finished payments. I has some bad credit card situations about 8 years ago, and also payed them off(about $2000 to pay off). Will it be hard for me to buy a house? I dont have credit cards, or anything else.

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Tman, , 30642
Fri Feb 1, 2008
Being pre-approved can make all the difference in the world .... it takes you from just being a "looker" to a - "buyer".

It can make a huge difference on what you buy and how much you pay for it ... it shows the seller you're in the market and they'll take your offer much more seriously than someone that has yet to get approved (and even perhaps sell a house) ...

Your credit is going to be very important, so sign up for True credit or FICO or any of these programs that are out and take a real good look at "all 3 bureaus" or see if you can find a lender that can read one ... bureau's are a funny thing, you can have stuff on there that never happened or it was just reported yesterday ...

The good thing is, you can get it straightened out and not get skinned for higher rates or an extra $3,500 in closing costs because of a minor situation that went on 8 years ago. .... Countrywide made bunches taking advantage of just that scenario.

Good luck!
1 vote
Craig Bartels, Agent, Indianapolis, IN
Fri Feb 1, 2008
Hi Pat,

Being pre-approved is highly recommended. It does a few things for you:

1)It shows the Realtor you are working with that you are serious about making a home purchase. Many people are just "lookers" and are not ready to buy. If someone comes to me and says they are already pre-approved, it shows me that the person is serious about buying and makes it much easier for an agent to put serious time into your home search.
2)When making an offer, it shows the buyer that you are serious and also that you have the ability to purchase the home. If a seller had two identical offers on the table, but one person was pre-approved, and the other buyer had not taken the time to get pre-approved, I would always recommend going with the offer with the buyer that was already pre-approved.
3)It gives you the confidence to proceed forward on looking for a home knowing how much you can afford. This also helps to narrow down your search to find exactly what you can afford and exactly what you are looking for.
1 vote
Tony Grego, , Indianapolis, IN
Mon Feb 18, 2008
Hey Pat!
Seems like it is best if you get pre-approved. If you have not done this yet give me a call or email. I am a Indiana Mortgage Broker and do not have any application fees. I will get you pre-approved or provide a detail for you to get approved in the future. I can do FHA and VA or we have plenty of options. Let me know if I can help.
Good Luck
Tony Grego - Indiana Mortgage Broker
0 votes
Durenda Fach…, , Coastal Tampa Bay area. Pinellas and Pasco Counties.
Fri Feb 1, 2008
It is not necessary to be pre approved to buy a home.
That said, it is prudent to be "pre qualified". This way you are not married to one lender and you have fronted no money. But you will know 1) whether or not you qualify to purchase and 2) how much you are qualified to borrow.
Not all lenders have every loan program available. Sometimes at the time you actually contract on a home, you can find a lender with a better loan program for you.
Given the information you've given, you may want to have a lender who offers FHA financing pre qualify you.
Your realor can help direct you to the lender if you would like
Best of luck
0 votes
Lise Desorme…, , Atlanta, GA
Thu Jan 31, 2008
Pat, I believe you should contact all three credit reporting agencies as there may be some good news for you to discuss with them. When I was a mortgage loan office some years ago the length of time bad credit issues remained on someone's record was 7 years. After that you can request to have them removed but no one will do it for you. I'm not sure if this is still true but it won't hurt to find out. Another reason to check in with these companies is often the reporting is incorrect so the least that will come out of the time you spend is the knowledge that your score is accurate and that will help determine what you need to do to increase your score.

Mortgage pre-approval? Yes by all means. I believe the best reason to be pre-approved is it will give you confidence moving forward and will keep you from looking at properties out of your price range therefore, less disappointment for you to deal with. Agents are more interested in showing homes to potential buyers who are prepared so their attention and focus to work on your behalf will benefit you in the end.
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0 votes
Cindy Brenem…, , 46123
Thu Jan 31, 2008
To your initial question, no, you do not have to be pre-approved, but I highly advise it with all my buyers. Doing so provides several advantages as Don and Jim have mentioned. In the Indianapolis area it is not required but more and more sellers are requesting pre-approval letters from buyers when submitting an offer. The process only takes a little time and many lenders can gather initial information over the phone. I would urge you to shop for a lender much as you would anything else. Get referrals from friends, family or those in the real estate industry and compare their programs to find the best mortgage for your needs. I think you will find it time well spent. If you have any other questions specific to the Indianapolis market, please let me know.
0 votes
Don Tepper, Agent, Burke, VA
Thu Jan 31, 2008
No. Of course not. It'll help, and when the market was hot it was considered pretty much necessary to have your offer considered. What you should do is check your own credit. Then consult with a mortgage broker--a good one--to get a solid idea of what you can buy. You should also get some guidance on how to strengthen your credit scores. Everyone can benefit by this process, not just people with credit glitches. Then, if you can, try to get pre-approved. It'll strengthen any offer you make. And if you can't get pre-approved for a number today, it's unlikely you'll be approved for that number tomorrow.

So there are two reasons to get pre-approved: (1) To strengthen your offer, and (2) To determine what you likely will be approved for. And, in your case, I'd strongly recommend it. But, to answer your initial question, no, you don't have to be preapproved to buy a home.

Good luck.
0 votes
Jim Welden, Agent, Greenwood Village, CO
Thu Jan 31, 2008
I would agree with Brad that the short answer is no - however, it is to your advantage to be pre-approved as most Sellers want to know that some lender has evaluated your situation and thinks you can qualify for a mortgage. It is particularly helpful if multiple offers came in when you submitted an offer - if you are pre-approved and the other Buyer is not pre-approved, and the same price was offered, your offer may be the one accepted.

I would recommend you sit down with a lender recommended by family or friends - it will cost you nothing beyond your time - and see what your options are - hopefully any past issues will have no affect or perhaps minor impact.... but you won't know that until you go thorugh the process - wouldn't you rather know it up front versus after falling in love with a home? The process will be painless - Best of luck.
0 votes
Brad Harper, Agent, Indianapolis, IN
Thu Jan 31, 2008
The short answer is no. Dependent upon your payment history in the last 24 months, you may qualify for any number of financing options. Also the amount of money that you have for downpayment is also a factor. You will have to present a preapproval when submitting an offer. Please let me know if there are any other real estate questions that you may have and I would be happy to assist you in your search for a home.
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