the application process.
Loan Pre-Approval It's your first priority.
Pre-Qualification is only a prediction. Pre-qualification means that
a lender has asked you some questions and based on your answers, told you approximately
how large a loan you may qualify for, subsequent to verification.
is a lot more specific than pre-qualification. When you're pre-approved, the lender
has documented your financial information and run a credit check, so you're actually
very close to final loan approval.
Get Pre-Approved? You're a Step Ahead of the Competition.
real estate market is so competitive it resembles the land rush of the 1800s,
as homebuyers race each other to open houses. In some areas, it's not unusual
for choice homes to sell within a few days after going on the market. Pre-approval
gives you an advantage because it establishes your buying power with sellers.
You're Less Likely to Lose Out
puts your financing on a fast track, so you can close the sale sooner. Home sales
contract offers usually include a grace period for the buyer to obtain financing,
perhaps 30 days, or less if the seller has competing bids. If you fail to secure
financing within that period, your chances of getting the house worsen dramatically.
You could lose out to another buyer while you're scrambling to find financing.
Put yourself in the seller's shoes. Why wait around when higher or more solid
offers are available? It may take a little longer to get pre-approved, but it's
well worth it.
How Does It Work?What loan underwriters
Loan underwriters will examine your savings
or cash-on-hand, your income, and your debt to determine how much you qualify
for. To get a head start on the loan pre-approval process, you'll need to assemble
some documents. But the first thing any lender will do is run a credit report
Correct any Credit Report Mistakes
If there's bad news involved, you want to be the first to know. That way you can
repair your credit before possibly striking out on your first loan. The second
reason to obtain your credit report is to correct any mistakes. Through no fault
of their own, one out of every four consumers has mistakes on their credit reports.
It can take weeks to correct your credit report, so you're much better off getting
a copy of it prior to completing a loan application.
Have a Right to Know Find out.
Under federal law,
a credit reporting company has a reasonable time to respond to your complaint,
typically 30 days. If the error-ridden credit report is already in the hands of
your lender, find out which credit reporting company provided the information.
If you ask for a copy of the report within 30 days of your loan denial, the company
must send you a copy, along with the name of any other lender who has received
the same report within the last six months.
Get Your Report Some will give it you free!
is the largest of the credit reporting companies. If you were denied credit for
any reason in the last 60 days, Experian will provide you with a FREE copy. Their
number is 800-682-7654. Trans Union and Equifax also provide reports. Any company
whose report has been the cause of your denied credit owes you a free copy.
if There's a Skeleton in My Closet?Be up front about it.
to be honest on your loan application about past credit problems. Don't try to
sneak anything by or you'll probably be rejected.
it in perspective. If the mark on your credit report is a couple of late payments
on a credit card or a car loan, write the lender a written explanation. Perhaps
you were on vacation, or lost the payment coupon. Sloppy bill paying can come
back to haunt you. But if you have some sloppy habits in your past, explain why
in writing. It may help you qualify for a loan.
that even if you have major problems, the worst case scenario is you'll have to
spend a year or two cleaning up your credit and paying your bills on time.
to Get Your Paperwork in Order
Here's what to gather.
3 of 9