This is probably one of the biggest misconceptions that a lot of consumers have about getting approved for a loan and ultimately the biggest reason why so many potential buyers remain on the fence about jumping off and doing what they need to do in order to buy a home.
I talk to people every week who want very much to quit renting and buy their own home but they are so afraid of taking that first step – contacting a lender to see what they qualify for! They have heard from so many – their friends and family and even the media about how only those with perfect credit can qualify for a loan. They know that their credit isn’t perfect because of some issues they have had in the past with some of their creditors.
The odd thing about so many of these folks is that they have never actually seen and/or pulled their own credit report so they really have no idea what their credit scores are or what is actually being reported on them. Professionally, I have found that many of these folks actually fear the worst when the reality isn’t the worst and in some cases, nowhere near as bad as they suspected.
Simply pulling a credit report for many of these folks and explaining to them that they indeed have some loan options available to them has more times than not relieved the person of so much anxiety and fear associated with that whole process. One such prospect even recently told me that when I told them they were a good candidate for a particular kind of loan program, they said it was like when they got hired for their job that they really wanted and had interviewed for three times before they got it.
I love it when clients tell me things like that, it’s such a constant reminder of why I continue to do what I do and why I love working with my little low-medium income buyers who are mostly first time buyers. These folks generally know little to nothing about buying a home and getting pre-approved and so many are actually afraid to start the process for fear of not being able to qualify for a loan and having past mistakes being rubbed in their face.
Even in spite of all the info available to them on the internet and in spite of all the research these folks do, so many of them are scared out of their mind of taking that first step of talking to a lender and finding out what their options are.
For me, getting these folks through that first step is all about educating them on the realities of getting pre-approved as well as the loan process. This is when I have the opportunity to dispel a lot of crap they hear from other people like their friends and family and especially the media.
In regards to my most recent client, while they did have some derogatory issues with school loans a few years ago, they did eventually resolve them and have been in good standing for a couple of years now. While their scores were not the best scores I’ve ever seen, they most certainly weren’t the worst scores either; quite frankly, they’re actually pretty average.
I did ask them to provide me with a letter of explanation (LOE) about why they became delinquent with their school loans for a period of time. They will also have to pay off a recent collection account from a previous creditor that they have been refusing to pay because of “principle”. I simply informed them of how an underwriter would be reviewing their “principles” and explained to them that in some cases we (mature, responsible adults who want to buy a home) have to swallow our pride in order to achieve a greater goal. In this case, suck it up, pay the bleeping bill so you can buy a house.
Buying a home is one of the most important decisions someone can make. Today's lending environment can be really scary, which is why it's important to get as much information as possible before starting the process. The pre-approval process is not a simple process and it's because it can get really complicated and convoluted, that borrowers today need affordable loan options that are best suited for their own needs.
Realtor® - CalState Realty Services
DRE#: 01364050 / NMLS#: 249822
Serving low-medium income individuals and families as well as first time buyers with both their real estate as well as their mortgage needs including down payment assistance
Los Angeles County -- Ventura County
© 2010 - All Rights Reserved