HomePrequalifying Before You Buy
by Marie C. Grimm
Greater Boston Real Estate Board
Before you start your house hunting in earnest, the real estate professionalwith whom you are working will likely "prequalify" you to determinea price range you can afford. According to the Greater Boston Real EstateBoard's (GBREB) Residential Association of Realtors (RAR), prequalificationis a necessary part of the home buying process that helps save you timeand money."Don't be shy or withhold information about your income orcredit status. Your real estate professional isn't trying to pry. Rather,he or she must know all details related to your ability to obtain a mortgage,"Elliott Pratt, chairman of the RAR's Residential Mortgage Finance Committeesays.
By candidly discussing your financial situation, you'll give the agentthe information necessary to show you homes you can afford, Pratt notes."If you don't open up, you are placing the real estate professionalin the role of a tour guide, not someone who can help you find a home withinyour budget. You'll wind up wasting your time and that of the seller,"he says.
Once you have signed a contract to purchase a home, you must choose alending institution or mortgage company from which to obtain your home loan.Your loan application will request financial data including your place ofemployment, assets, and liabilities (including recurring debts such as creditcard bills and car payments).
Here are two important tips on loan qualification from the ResidentialAssociation of Realtors' Residential Mortgage Finance Committee: 1) Do notborrow the down payment without disclosing the loan, submit fake letters-of-creditor gift letters, or make secret financial arrangements. 2) Accurately listyour income and assets, all debts and the approximate amounts you owe.
You'll most likely be charged a credit report fee by the lender, whichwill cover the cost of having your credit history examined. Credit reportingagencies compile credit reports on consumers, including bill payment history,as well as whether you have been sued or filed for bankruptcy, as well asother information.
Federal credit reporting laws do not give you the right to inspect theactual credit report at the reporting agency or to receive an exact duplicateof the report. But, you are entitled to a summary containing the sourcesof the report's information.
If your ability to obtain a mortgage is adversely affected by the creditreport, you have the right to challenge its accuracy and seek corrections.
"The credit report is part of the information the lender uses todetermine if you qualify for a loan. It is not a mechanism to prevent youfrom buying. Remember, lenders want to make loans, not turn them down,"Pratt says.
The Greater Boston Real Estate Board is one of more than 1,800 localboards and associations of Realtors that comprise the National Associationof Realtors. As the nation's largest trade association, NAR is "TheVoice for Real Estate," representing nearly 750,000 members involvedin all aspects of the real estate industry.
The Greater Boston Real Estate Board, represents more than 4,000 residentialbrokers and salespersons. The term REALTOR is used exclusively to referto members of the National Association of Realtors, who subscribe to a strictcode of ethics.
GREB is located in Boston Massachusetts
55 Summer Street, Boston, MA 02110
(617) 423-8700