The Power of the Prequal

You've found a house that you want to buy.

You've checked other homes, you are confident
in the purchase price.

You are ready to write the offer with your real
estate agent.

The last time you needed a home loan, you
had little difficulty getting qualified and things
went smoothly.

All systems GO!

Hit the brakes, turbo! Things have changed
and the financing may not be as easy as it was
the last time.

All professional real estate agents want you
to go through the process of applying for a loan
and getting prequalified for the likely financing
you will need.

It makes every part of the process smoother.

You have an excellent idea of the proper price
range to be looking.

You have an idea of any obstacles that you may
be facing in this new lending environment.

The agent doesn't waste time and resources
showing you properties that are out of your
price range.

You don't fall in love with a home that you can't
afford.

The escrow period is significantly shortened if
we work together to get your paperwork in
order as you are looking at homes, rather than
starting from scratch from day one of the
escrow period.

When your offer is presented, it is strengthened
by an accompany letter from a reputable lending
source (me!) that you have done your homework and
that you are prequalified for the financing.

Admittedly, there are many borrowers who find
out that they are not quite prepared to buy at
the time they want.

But finding that out before they spend hours
looking at homes and getting emotionally attached
is a good thing.

Sure, it can be disappointing. But if you are
committed to buying at a future point, you can
develop a game plan to solidify your career, boost
your earnings, clean up some credit flaws, save
more money, etc.

So if you want to put yourself in the best possible
position in your next home purchase, it would be
wise to follow these steps:

1. Contact your preferred lender (me!) to get
your paperwork started. This will include a
written loan application, supporting paperwork
to verify income, assets, employment, debts.
It will also allow me to run your credit report
to make sure that all is well, or to see if we have
a project on our hands.

2. Narrow your choices for the type of financing
vehicle you prefer. In today's world, the choices
have been simplified. Low-doc, no-doc, interest-
only, exotic adjustable rate loans, and deferred-
interest loans have essentially disappeared.
The dominant choices are conventional fixed-
rate, FHA, VA, and some milder forms of adjust-
able rate loans.

3. In addition to me using my 33 years of exper-
ience to ascertain your qualifications, we can
also obtain a decision from an automated under-
writing system (AUS) that conforms to FNMA,
FHLMC, FHA and VA guidelines. This system
is based on data input, so the key is to know
what we can verify so that we get a decision that
is supportable.

4. At this point we can issue a letter that makes
note that we have received and reviewed your
loan application, we have run your credit report
and found it acceptable, and that we have verified
your income, assets and debts. We can also
indicate that we have a written loan approval
from the AUS that supports a specific sales price
and loan amount.

5. As you find the home that fits within the
qualifying criteria, we just need to make sure that
the property will also be acceptable. Special care
should be taken if you are looking at condominiums,
or if you are looking at home that may require
some repair or remedy of deferred maintenance.

The agent representing the property and the agent
representing you as a buyer will be pleased that
one of the major hurdles - obtaining the financing
to purchase the home - has been diligently assessed
and that the surprises can be kept to a minimum.

Some borrowers dread the process of the loan
application, but the reality is that it most probably
will need to be done sooner or later. 'Sooner' makes
the most sense to minimize transactional trauma,
while 'later' backloads all the pressure when emotions
are running high and deadlines are looming.

Let's work together, plan ahead and make the process
as smooth as possible.