Loan Considerations for Purchasing a Home
in Summit and Park Counties
For a simple and straightforward home buying experience, it works best if the buyers begin their home search already prequalified for a loan.
Being prequalified will avoid several issues from arising during the purchase process.
First, if financing is going to be used for the home, the sellers (and selling agent) will want to have a prequalification letter attached to the purchase offer, or a provision in the purchase offer stating the buyers will supply a prequalification letter in an immediate time frame, such as 24 to 48 hours.
The second issue that can be avoided is buyers assuming they’re more qualified than they actually are and shopping for a home in a price range that’s out of their financial range, or aren’t qualified to purchase a home in the first place.
What A Lender Will Need From You for a Prequalification Letter
Becoming prequalified is a simple process.
Prequalification is not as stringent of a process as an actual loan approval; it’s fast and usually completed within 24 hours.
Prequalification is simply a loan officer conditionally qualifying you ahead of time for a loan.
The prequalification is not an approval for a loan. It’s an initial assessment of your financial situation and whether you’ll qualify for a loan to meet your financial considerations for a home in a given price range. The actual approval will come about during the loan underwriting process when the home is under contract.
The loan officer typically won’t be pulling your credit report.
They’ll be asking for your income from all sources and also your debt obligations.
The loan officer may need to pull your credit report if you have any of the following conditions:
Having any of these conditions doesn’t mean you won’t be prequalified. The loan officer needs to put these into context.
When the loan officer has done a preliminary review of your eligibility and you’re prequalified for a loan, they’ll issue a prequalification letter for the amount you’re qualified for, or for the amount representing the price range of what you’re looking to purchase.
Interviewing Your Lender
Typically, a qualified real estate agent will have at least 3 or 4 lenders to recommend to potential home buyers. (Contact Colorado Homes Real Estate for their lender recommendations.)
It’s important to shop the loan because interest rates, terms, and loan costs will vary.
Shopping multiple lenders in a similar time frame is typically seen as a one-time hard pull on your credit score; the financial institutions can see the buyer making numerous loan inquiries for the same loan and usually won’t keep hitting the buyer’s credit score with hard pulls.
It’s also vital when financing real estate in Summit or Park County that the lender is familiar with the area and has performed loans up here before. Without experience in the area, home purchases in this area can go awry because of the inexperience of a lender who’s not familiar with this market.
Here are some things to ask a lender when searching for a real estate mortgage in Summit County:
Loan Type and Length
Interest Rate and Annual Percentage Rate
What happens to the locked interest rate for the loan if interest rates go down?
What Your Lender Will Ask From You During the Course of the Loan Process:
Permission to pull your credit history
Your taxes going back two years
Income records such as W2s, pay stubs, proof of additional income
Bank and/or asset statements
Debts and liabilities
An outline of any gift monies to be used for the home purchase
Typically, a financed real estate transaction in the area will take 5 to 6 weeks to complete. Under 5 weeks is doable, but challenging, with the most significant obstacle often being the time frame for the appraisal process.
Note – Loans can sometimes fail during the underwriting process because of innocent actions by the home buyer. While the home purchase is being competed, don’t make any large purchases, or close any accounts.
Having your prequalification in place before you begin your home search will make for a much smoother and simplified purchase process!
Please contact us for additional information, or with questions about purchasing a home in Summit or Park County.