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September 8, 2002

Alexandria Real Estate Market Update / Prequalified is not enough

by Liz Merryman GRI, ePRO, SRES - Key Realty LLC

Being pre-qualified simply means that a lender has told you how much money you may be able to borrow with your current income and debts. It does not mean that you will be able to get the loan.

Credit Report: The lender should pull a credit report and review your credit and employment history. Yes, banks do charge a fee to pull up a credit report, but you need to know if there is anything on there that would prevent a loan going through.

Many mortgage companies will sit down with you for an hour or so and ask the questions, going over credit, debt and employment history for free.

The lender should give you an Estimate of Closing Costs, showing your estimated down payment and monthly mortgage payments including tax, insurance, and MIP escrows, if any.

Comparing Rates: You can shop around for the best rate. But beware, some companies will give you a great interest rate then charge extra points, or closing costs. Always ask for a written estimate of closing costs!!!

There are some standard closing costs. Buyers with outstanding credit should be able to find a loan with a great rate and minimum closing costs. Buyers whose credit needs work may end up paying more in a higher interest rate and/or more closing costs.

Loan Application: If you know that you will be getting a loan with Bank XYZ because you have banked there for years and always do business there, make a formal loan application. This will take you through the initial stages of getting a loan. It will cost between $50 and $75 and be well worth the time and effort.

Compare Programs: many buyers will fit into more than one loan program. Your REALTOR can help you decide which loan program works best for you.

It is important to do all this before looking for a home. The housing market in central Louisiana is jumping! Houses in good condition, priced right go quickly. If "your" house comes on the market, you have to be ready to make an offer. That means having the information you need to make decisions. So Step #1 in buying a home is to see a lender before looking for a house! Your REALTOR can help guide you through this process.

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