In this "Spring TX first time home buyer series" I hope to alleviate some of the first time home buying mystery. I have noticed when people start thinking about buying a home the first thing they will do in this technological age is to start looking at homes online. If that is what you are doing "STOP"; the VERY FIRST step in the process should be to talk with a good lender. It is discouraging to have started looking at homes online and then find out you don't qualify for the homes that you are looking at. Even if you are 6 months to a year away it is a good idea to at least talk to a lender to make sure you are on the right path. If you are serious then go ahead and get yourself pre-approved. That way you will only be looking at homes that are in your price range. When I say pre-approved I'm not talking pre-qualified; I'm talking pre-approved. There is a difference between the two. In the days where anyone could get a loan this was not a big deal but those days are over. With all the new lending rules it is not uncommon for people who have excellent credit to have to jump over hoops to get a home loan.
What is a Pre-Qualification? A prequalification is simply a meeting between a loan officer and a customer to determine what the mortgage needs of the customer are. Income and assets are not verified. The credit report may or may not be pulled. The information is not submitted to an underwriter. The lender does not receive enough information to make a credit decision.
What is a Pre-Approval? Pre-approval includes a complete loan application. A credit report is pulled and asset and income are verified. The information is submitted to underwriters for "credit only" decision. Once you have been pre-approved your credit package can be used with any property. Final loan approval will be subject to the underwriter approving the property only. A pre-approval is normally good for 90 days. The borrower receives a written pre-approval letter. A true approval requires this income and asset documentation and credit reports are required on all loan types. Being pre-approved in Spring TX gives you an edge when you start looking for your home. If you get in to the situation where there is more than one offer on a home it is often the person who is further along in the loan process who will get the home. I have even had the situation where the other offer was a little more but my seller preferred the person who had a true pre-approval. The rules have TOTALLY changed in the mortgage industry.
The products that lenders had for first time home buyers in Spring TX last year, maybe even last week are no longer available to the consumer which makes getting pre-approved for your loan more important than ever. Once you even think that you might be interested in purchasing a home you should call a lender. Even if the news is not good by going through the process you will know what you need to start working on and you can make a game plan to get your credit in order. The days of a real estate transaction being dependent upon the creativity of a loose lender are finished. Down payments are back again and FHA loans are sometimes the only game in town with VA loans being about the only 100% loan. With all of this in mind getting yourself pre-approved before you ever start looking is more important than ever. I am also attaching some Do's and Don'ts you might consider putting in to action when you start thinking about purchasing a Spring TX home. Do's
- Do make all your payments on time. Your credit will be checked again right before you close.
- Do continue saving money. There are always additional expenses once you move and you will be glad for that savings.
- Do make deposits into your bank account on a regular basis. If you have any unusual deposits for large sums of money document them as the lender may need to verify the source.
- Do not co-sign for any loans for friends or family. That debt would be held against you.
- Do not decide this is the time to change banks; you can do that after you move in.
- Do not open ANY new accounts. Even though the new account has a $0 balance it may still affect your debt to income ratio.
- Do not buy a new car or new furniture!!! Wait until after you are in your new house then go shopping otherwise the debt could affect your debt to income ratio.
- Do not lender shop over the Internet. Each lender pulls a credit score and multiple hits on your credit report can cause your score to drop dramatically.
- Do not pull your own score and then decide you will check why accounts are still open or have balances. I did this myself and then had to write a note at closing to explain why I had all these hits on my credit
For all your Spring/Tomball/Magnolia/The Woodlands needs, contact me today! Marchel Peterson Results Realty Cell: 832-721-8332