Grades are overrated in school! Let’s face it, the person who is last in their graduating class at med school is STILL called a doctor. After all that studying and cramming to achieve that 4.0, sometimes a C is good enough! When you’re dealing with a loan officer to buy your home, being a C student makes you the perfect home buyer to get what you need.
Talk To A Loan Officer
One of the first things you need to do when considering buying a house is to talk to a good loan officer. It’s always a topic of conversation a real estate agent will bring up when initially meeting with you. The last thing a seller wants to do is accept an offer from someone who is not qualified to get a loan. Many times, sellers won’t even allow an agent to show a house to a buyer who has not been pre-approved. How upset would you be if you found that perfect house, wanted to put an offer on it, only to find out that you are unable to purchase a home at the time of your loan type won’t qualify for that particular house?
Loan officers will determine if you are eligible to purchase a house, how much you can afford, and what type of loan you qualify for, among other things. These items are imperative to know before going to look at houses. There are also many factors that go into being pre-approved to purchase a home like your debt to income ratio, which you can CLICK HERE to read more on debt to income ratio, commission-based or overtime paid positions, and whether you have had a foreclosure or bankruptcy in the past.
Here are some Lenders’ Frequently Asked Questions to help answer some you may have but maybe afraid to raise your hand.
What’s The Difference Between Pre-Qualification And Pre-Approval?
You may hear some different terms when speaking with a realtor or a lender such as pre-qualification and pre-approval. A pre-qualification is a quick way of determining if you can get a loan based on what you tell the loan officer about your income and expenses. It’s simply an estimate, which can be used to gain an idea of what you can afford to purchase. A pre-approval means that a lender is taking a thorough look at your income and expenses, including reviewing your credit report and score. Sometimes, they may ask for additional documentation as well such as bank statements, W2’s, and paystubs.
4-C’s A Lender Looks For In A Buyer
If you are nervous that you may not qualify for a loan, here are the 4 C’s that a lender is looking for:
1. Capacity: Your current and future ability to make payments
2. Capital or Cash Reserves: The money, savings, and investments you have can be sold quickly for cash
3. Collateral: The home or type of home you would like to purchase
4. Credit: Your history of paying bills and other debts on time
Do Not Do This When You Are Purchasing A Home
Once you get pre-approved for a loan, you will know what your ideal budget will be on a home. Your lender will even give you an idea of how much your payment will be including taxes and insurance so you can be comfortable knowing where you stand. But just because you get pre-approved, doesn’t mean you are definitely going to be able to get a loan! There are many changing factors over the time you start looking at houses, to the time you make an offer on a home. Maybe you got laid off, started a new job, or bought a car…everything can affect whether or not you get approved when you make your final loan application. A few DON’T DO items when you are in the process of purchasing a home are:
- DON’T change jobs!
- DON’T open or close a credit card or a new account
- DON’T marry into bad credit
- DON’T make large deposits
- DON’T make major purchases, such as buying furniture, appliances or a new car
And remember, not all lenders are the same. If one cannot pre-approve you, it doesn’t mean none can. Each lender has different standards and one may lend more conservatively than the other. If you have any questions about talking to a loan officer or recommendations, please feel free to ask!