And that next step is to get a preapproval appointment with your first choice lender. Usually, you can do this over the phone and fax any documents the lender needs to get started.
But, don’t throw away your lender list yet. Once you’ve found your dream home and know the sales price, you may want to contact these lenders again for Good Faith Estimates. But for now, you want as few credit inquiries on your credit record as possible. Before you write an offer on a house, you’ll want a preapproval letter from the lender stating that you’ve applied for a loan, your credit and income look good, and you qualify for the amount of the offer. Make sure the letter states the exact dollar amount of the offer, not the maximum you can qualify for. You don’t want to give the seller ammunition to counter a low offer.
Dan and Marie did this when they bought their first home. After deciding on the lender they wanted to work with, they paid $40 for a credit report and faxed the documents needed. Within a couple of hours, their lender got back to them with a preliminary approval. There was a home in the neighborhood Dan and Marie were renting that they liked and was in their price range. Armed with a prequalified letter from their lender, they took their realtor’s advice and offered several thousand dollars below the asking price. Knowing that the sellers were unlikely to take the offer, but hoping they would counter up to their lowest price, Dan and Marie were pleasantly surprised to get an acceptance.
The sellers, feeling the offer was a bird-in-the-hand because of the mortgage approval letter, didn’t want to risk losing the sale. Three other offers had failed when the buyers were unable to get loan approvals. Many times when that happens, the sellers get frustrated and a bottom line price that they wouldn’t go below a month earlier suffers a meltdown. It’s replaced by a let’s-just-get-this-silly-house-sold-sowe-can-get-on-with-our-life mind-set.
When a seller gets to this point, it’s a great time to present an offer. Unfortunately, there’s no way to gauge sellers’ frustration levels until you sit down with them.
Now that Dan and Marie knew the exact loan program and amount they needed, it was time to make sure they were getting the best deal. Calling the other two lenders on their list, they asked for a Good Faith Estimate on the sale price and loan terms they knew they qualified for.
Interestingly, when Dan and Marie got the other two Good Faith Estimates they noticed that their lender was not the cheapest by several hundred dollars.
First, this was obvious because their APR quote was the highest of the three bids. Second, comparing the line-by-line costs in the Good Faith Estimate revealed unusually high doc preparation, underwriting, and processing fees.
This gave Dan and Marie two choices. They could go with another lender and pay for a second credit report, or they could give their current lender a chance to meet the competition. They chose to talk to their current mortgage broker and see if she would meet the lower bid. Not surprisingly, their loan officer agreed to lower her fees to keep from losing the loan.
But, don’t throw away your lender list yet. Once you’ve found your dream home and know the sales price, you may want to contact these lenders again for Good Faith Estimates. But for now, you want as few credit inquiries on your credit record as possible. Before you write an offer on a house, you’ll want a preapproval letter from the lender stating that you’ve applied for a loan, your credit and income look good, and you qualify for the amount of the offer. Make sure the letter states the exact dollar amount of the offer, not the maximum you can qualify for. You don’t want to give the seller ammunition to counter a low offer.
Dan and Marie did this when they bought their first home. After deciding on the lender they wanted to work with, they paid $40 for a credit report and faxed the documents needed. Within a couple of hours, their lender got back to them with a preliminary approval. There was a home in the neighborhood Dan and Marie were renting that they liked and was in their price range. Armed with a prequalified letter from their lender, they took their realtor’s advice and offered several thousand dollars below the asking price. Knowing that the sellers were unlikely to take the offer, but hoping they would counter up to their lowest price, Dan and Marie were pleasantly surprised to get an acceptance.
The sellers, feeling the offer was a bird-in-the-hand because of the mortgage approval letter, didn’t want to risk losing the sale. Three other offers had failed when the buyers were unable to get loan approvals. Many times when that happens, the sellers get frustrated and a bottom line price that they wouldn’t go below a month earlier suffers a meltdown. It’s replaced by a let’s-just-get-this-silly-house-sold-sowe-can-get-on-with-our-life mind-set.
When a seller gets to this point, it’s a great time to present an offer. Unfortunately, there’s no way to gauge sellers’ frustration levels until you sit down with them.
Now that Dan and Marie knew the exact loan program and amount they needed, it was time to make sure they were getting the best deal. Calling the other two lenders on their list, they asked for a Good Faith Estimate on the sale price and loan terms they knew they qualified for.
Interestingly, when Dan and Marie got the other two Good Faith Estimates they noticed that their lender was not the cheapest by several hundred dollars.
First, this was obvious because their APR quote was the highest of the three bids. Second, comparing the line-by-line costs in the Good Faith Estimate revealed unusually high doc preparation, underwriting, and processing fees.
This gave Dan and Marie two choices. They could go with another lender and pay for a second credit report, or they could give their current lender a chance to meet the competition. They chose to talk to their current mortgage broker and see if she would meet the lower bid. Not surprisingly, their loan officer agreed to lower her fees to keep from losing the loan.
No comments:
Post a Comment