How to Get Prequalified To Buy A House Or Real Estate

Difficulty: Moderate

Instructions

Things You'll Need:

Access to your past credit history.
Your last two years of tax returns.
A phone book or internet access.

Step 1

Gulp, I Am Sorry To Have Wasted Your Time.

Let's start with a honest question. Why do you need to get prequalified for a home loan? Why shouldn't you just go out and contact sellers? Why shouldn't you employ a Realtor and have them drive you all over town looking at homes? There are a few reasons. First, you don't even know how much of a house you can afford to buy. If you are talking with sellers about homes that cost $200,000.00 and you can only afford $125,000.00 homes, don't you think you are wasting the seller' s time and your own? Also, what about if you are using the services of a Realtor? If you are asking them to show you houses which cost over $200K, aren't you wasting his or her time as well if you can't afford homes in that range? What if you can't get prequalified at all?
Step 2

We Are Going To Buy A House!

What is the most important reason to get prequalified for a loan? It puts the buyer in the driver's seat. How? Sellers will take you more seriously when they know that you are prequalified and not some tire kicker. The fact that the seller knows that you are prequalified might make the seller want to negotiate with you directly or on better terms because they know you are a serious buyer. Same goes for your Realtor. If you have gotten yourself prequalifed, it lets your Realtor know the same thing. You are serious about buying a home and you probably are a buyer sooner than later. Both your Realtor and the seller know that if you weren't serious about buying a house, you wouldn't have gone to the trouble of getting yourself prequalified.
Step 3

Take Your Time To Pick Your Lender

So now the question remains. How do you get prequalified to buy a house? You next step is you need to choose a lender to get your loan through. This can be done by asking friends or family members if they can recommend someone? It can also be done by looking in the phone book or online. What about the local bank you do business with? Interview two or three lenders and ask questions about loan fees and points you would pay on a loan. Don't let any lender run your credit report until you have chosen that lender to do business with. Running your credit report over and over can knock your credit score down. Take you time and pick the bank or lending institution you feel most comfortable with. If you have heard good things about a certain lender from your peers or other professionals, chances are this lender could be worth taking a gamble on.
Step 4

Come Prepared With Your Information.

Once you have chosen a lender and you are satisfied with your choice, the lender will have some work for you to do. They will have you fill out a home loan application to find out how much of home loan you will qualify for. They will want all types of information from you and they will ask lots of financial questions too. So bring in the information they will need on your first visit. They will want your last two years of tax returns and they will want to pull a current credit report on you. What kind of questions will your lender ask? They will want to know if you have ever owned a home before? Do you have bad credit or have you ever filed for a bankruptcy? How long have you been at your job? Are you self employed? How long have you lived at your present address? Are you new to this area? How much of a down payment can you afford? How much of monthly house payment do you think you can afford? Do you have investments, a large savings account or other assets that you own like real estate or a business? So as you can see, the lender will be ready with questions and you need to be ready with answers. Come prepared and be ready to get prequalified. Keep in mind that your loan isn't the only loan that your lender is working on. So the more prepared you are, the faster the prequalified process will go. One final tip. Be honest with your lender about your past financial dealings. If you aren't, they will find out and deny your loan. So always be honest even if you aren't buying a home. Also keep in mind that even if you get prequalified, you will still have a final process to go through to get actually qualified for your home loan. So don't make any large purchases or fail to keep paying your bills in a timely manner during this time.
Step 5

Watch Out For Those Sellers Or Realtors

Finally, when your lender has went through all of your paperwork and information, they will be able to tell you if you can buy a house. They will tell you your price range that you qualify for. This price range is based on your income, credit report, job history and your assets. Once you have this figure, you now know what amount you are prequalified for. Meaning you will know the price range of the house you can begin looking at. One real estate tip. Don't tell anyone how much you are prequalified for. Not your Realtor and not any seller you talk with. The reason being is that you don't want to forfeit your negotiating power in any real estate deal Just tell your Realtor or a seller that you wouldn't be looking at homes in the price range if you couldn't buy one. Another financial tip. Ask your lender to write you out a prequalification letter that you can include in any deal that you are negotiating on. However, make sure you tell your lender not to put the ceiling amount( the highest amount) that you are prequalified for in this letter. This way once again, you won't be tipping your hand on how much you are prequalified for. If a seller knows you can pay more for his or her home and you have offered less. The seller has some valuable information, don't you think?
Step 6

Always Think Creatively In Real Estate Financing.

If you have been told you can't qualify for a home loan, I have inserted a few articles I have written on E-HOW about how to buy real estate or a home without a lender. This is done with creative financing Check those articles out, the links to those articles are below. Remember there is always a way to buy real estate, if you will just think creatively.