What do you do as a Prospective Home Buyer?
Three topics are covered below which contain important information for a prospective home buyer. In Napa we have been in a competitive “sellers’ market” for a few years. It’s paramount that you have the following information and follow through to make your home buying experience as hassle-free as you can make it.
Why Do I Need to be Pre-qualifed Before I Look for a Home in Napa?
Most people don’t want to talk about their finances, even with their best friend. But finding out if you are financially qualified to buy a home is your very first step. Everyone is upset when a buyer and seller meet and negotiate a price, only to find out days or weeks later that the buyer cannot afford the price tag. Looking at homes is the fun part. But “eat your vegetables first” and find out what you can qualify for, BEFORE you fall in love with that house.
When there are more buyers then there are sellers, as in a “sellers’ market,” having your loan pre-approved can give you an edge over other offers. It is also the best way for a seller to know that if you make an offer, you can back it up, and that you are really in the market to buy now.
Is Having a Loan Consultant Important?
There are media ads everywhere for home loans. Choose the type of loan representative that best suits your needs. If you are unsure, you may want to contact a mortgage “broker,” someone who deals with many, many lending institutions and knows the specific requirements of each. For example, if you have been on your job for many years but do not have a good size down payment, they may place your loan with an entirely different lender than if you have a large down payment and have been employed a short while.
Most lenders have specific profiles that they prefer their borrowers fit into, and one lender’s idea of a good risk is different from another. Someone who works with different lenders on a daily basis will know their particular quirks. Your loan representative, whether they are a mortgage broker or a mortgage banker, is your greatest ally in finding money to purchase the home you have your eye on. They will help you fill out your loan application so that you will be viewed in the best light by the lending institution.
I would be pleased to help you in this process by suggesting possible resources or lenders to you in the Napa area. Remember that with my experience I have been connected to many major players involved in Napa real estate.
What Is A FICO Score?
Part of the numbers a lender looks at in your process of pre qualifying for home loan is your credit score, a number that indicates to lenders how likely you are to fulfill the obligations of borrowing a substantial sum of money.
When people talk about “your score” they are talking about your current FICO® score. FICO® scores are calculated by software developed by Fair Isaac and Company. In order for a FICO® score to be calculated, the report must contain at least one account which has been open for at least six months. The report must also contain at least one account that has been updated in the past six months. This ensures that there is enough recent information on which to base a score.
FICO® scores are used as a guide by lending institutions to calculate future risk. They are taken into account with additional factors that each lender uses as part of their decision making process as to whether or not to loan money, and at what rate and terms. To further complicate matters, your FICO® score may be different at each of the three main credit reporting agencies. Equifax, Experian and TransUnion are the three major credit reporting agencies that lenders rely on.
As your data changes, your FICO® score also changes. Your score today may very well not be the same as your score last month. Someone with a FICO® score in the 700’s is likely to have little problem getting a loan approved. As a general rule, the lower the score, the longer it takes to obtain financing and the higher the interest rate.
Remember that I can be a resource for you no matter where you are in this real estate arena. Nothing gives me greater pleasure than knowing I’ve helped someone get the home of their dreams.
But the process is likely to begin with pre qualifying for home loan and finding a lender who likes the numbers in your personal financial record.