I wrote a few articles back in 2006 which were published on various websites, and I thought I would share these again in my Blog over the next few weeks. Not much has changed in the procedures, but three years have past and we have been in a housing crunch for almost those entire three years. I hope this information is beneficial to you.
Pre-qualified? What is that?
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Author: Barry Fotheringham
Article: Pre-qualified? What is that?
Dated: 01/14/2006
You have been looking at homes through a Multiple Listing Service (MLS) link or a Homes magazine and you want to start looking at homes. You call your choice of Real Estate Agent and during the conversation the agent says, “Are you pre-qualified?”
Get pre-qualified?
Before you get ready to buy a home you need to see a lender and start the loan application process. If you are not sure who to contact, talk to your real estate professional for recommendations. I personally like my clients to talk to a loan representative that works directly for a Mortgage Company.
Why do You need to get pre-qualified first?
Most Real Estate agents do not try to do the work of a lender. True professionals usually recognize the need to rely on other true professionals to bring your transaction to a successful close. The Real Estate agent does not want to show properties without the buyer completing a tri-merge credit check through a lender. The cost of the credit report is normally under $25. The credit report will show your credit history and include three FICO scores. It is the middle score that is normally used by the lender. You will also need to complete a loan application. With all the loan programs available, it is up to the loan representative to explain the different type of loans that may be available to you. It is at this point that you will know how much home you can purchase. Be sure you get a “good faith estimate” which shows the costs of the loan and your approximate monthly payment from the lender. This will help your agent structure the costs and financing of your Residential Purchase Contract.
If you are in the state of Arizona your lender will also complete the Arizona Association of REALTORS® form called the “Loan Status Report” (LSR) which must accompany the Residential Purchase Agreement. The Purchase agreement is the most important document, but the LSR is the one item that allows the procedure to continue to an acceptance or a counteroffer. Without the completed LSR it is a total rejection by the Seller. The lender prepares the LSR based on your application and credit report.
I hope you now see the importance of getting pre-qualified before you start looking at properties.
About the author:
Barry has been in the Tucson Real Estate Business for over 30 years. He holds the CRS, GRI, and e-Pro designation with the National Association of REALTORS®. He is the Broker for his family owned business.
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