Loan Pre-Qualification. How? Why?
[DERIK] What’s up everybody? Today, here at Keith Home Team we’re discussing working with lenders and why we want to get pre-qualified for a loan. Good stuff. Let’s do this. I need some pizza…
[CALEAB] All right Crys, I have some questions for you. So, I know how much money I make. I know my credit’s awesome. Why in the world do I need to go talk to a lender to get pre-qualified to check out some homes?
[CRYS] That is a good question. There are many reasons. First of all a lot of your sellers are going to ask that we only bring qualified buyers into their home to look at it in the first place. As you can imagine, not everybody wants to get their four kids, clean up the house and get out to show their home just to find out that you aren’t qualified. So, they always ask us, regardless if the market’s hot or cold, they want to see that.
[CALEAB] But, I’m pretty sure, that I just want to see this one home.
[CRYS] Before you go look at this one home, if it’s the one, are you ready to buy it?
[CALEAB] I should be, if I have my credit, my money and I know how much I make. What else is there?
[CRYS] When you go to meet with your lender, you’re going to bring your pay stubs to get a true qualification, not a pre-approval. So, you’re going to have to bring your pay stubs, your W-2’s, your bank statements and they are going to look at your debt to income ratio. They’re going to look at all of these different things besides just your credit score to decide what type of loan you qualify for. The type of home you may be looking at doesn’t even qualify.
[CALEAB] Is that going to hurt my credit?
[CRYS] You are going to get your credit pulled but once it is open you can shop around with lenders.
[CALEAB] SO, I can see more than one lender. It’s not just set to one.
[CALEAB] Now that I have my pay stubs and everything is sent to my lender and I shopped around a little bit and I really chose one, why is it so important for me to get going quickly?
[CRYS] You’ve seen how quickly homes are moving, right now in the market. Some of them are multiple offers within the
first 24 hours. If you haven’t already met with your lender and you don’t have this lined out and don’t have your pre-qualification in hand, and even if you have a good basis and you know what type of loan you’re looking at, what type of payment you’re going to be getting and what your interest rate is. Even if all of that is correct, in the time that you are able to meet with your lender, get them the documentation and get that pre-qualification letter in hand so you can go ahead and place your offer, somebody else has already got that home. It’s that fast.
[CALEAB] Wow, so we need to get going.
[CRYS] Now that we’ve talked about some of this, do feel like you are confident, and you understand or know what your down payment will be? What your closing costs will be? What your monthly payment will be? And, your interest rate?
[CALEAB] I think I’m going to go find a lender.
[CRYS] Are you a little nervous about meeting with a lender?
[CALEAB] How good looking is she?
[CRYS] Do you feel like you will be able to recognize if one is properly educating you and giving you good information?
[CALEAB] I think so. I think you’ve been super helpful, here. But, I think it will take some talking to a couple of people, see who I connect really well with, see who really understands what it is I’m looking for and will work with me.
[CRYS] A couple of things to be aware of are your lender fees. You want to find out the loan type, USDA, FHA, or VA and how that affects the type of home you’re trying to purchase. When I say type of home, I mean is this home that needs some repairs, or is this new construction. There are a couple of things to think about.
[CALEAB] There are quite of few of them. More questions for the lender. Got it.
[CALEAB] Now that I’ve chosen my lender and have done all the steps that you have talked me through. How much money do I need up front?
[CRYS] It can vary but you want to have enough money to place an earnest money check with your offer. You want to have enough money to cover your inspections, and those can vary. It depends on if you are getting a regular home inspection or if it’s a rural property and you need a the well and septic or maybe there’s a shop inspected. That can vary. Then your appraisal which sometimes can be rolled into your loan.
[CALEAB] So, my $250 buck isn’t going to work?
[CALEAB] I need to save up a little, too?
[CRYS] Yes. Basically, we talked about pre-qualification. Not, pre-approval. The difference you’re going to see there is that you can get a pre-approval just by making a call to your lender. You can give them so basic information and they will run your credit. Based on those items alone, they may say you approved. I want a really solid offer then I would go the extra step and get your qualification. With your qualification, they’re going to ask for more documentation and get a more accurate picture of what’s going on. They’re going to look at your W-2’s, pay stubs, bank statements, your divorce decree.
PUBLIC SERVICE ANNOUNCEMENT!
[CALEAB] Did you know that 50% of people that get married actually get divorced.
[CRYS] That’s for another series…
[CALEAB] Come back later…