The purpose of this article is to educate those who haven’t bought their property so that they can gather the necessary documentation. There are different techniques and different strategies that you can apply in real estate investing, but for those out there who haven’t bought their first property and they’re simply looking to gather the necessary documentation to purchase a property, this article could be a guide for that process so that way, you can improve your chances of getting approved for a mortgage.
Getting the pre-approval letter is very important. Why? Well, over time, realtors have also learned to improve ways to identify the real true buyers who are truly interested in buying a property versus those who are simply walking around and trying to see or those who haven’t made up their mind about a property.
Purchase a Property: Pre-approval letter
Realtors typically request a pre-approval letter. A pre-approval letter is simply a letter that is issued by the bank that certifies that you have been approved by the bank and that you are simply ready to go and buy a property and the bank is willing to go ahead and finance your deal or your purchase.
In order for you to get one of these letters, it’s like basically applying for a mortgage from scratch. You have to gather your paperwork and present it at the bank and let them evaluate you and decide whether you are creditworthy of getting a mortgage or not.
Among that list is:
1.- Copies of your tax return. That’s typically the past two years.
2.- 6 or 12 months worth of bank statements. That will depend solely on the bank.
3.- You need to get the last two pay stubs because they still need to verify that you’re still employed.
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4.- A copy of your FICO score. Not Credit Karma because Credit Karma is based on a VantageScore. It is your FICO score. Most lenders still use FICO score to decide your creditworthiness or not.
You’ll want to shop around for different ways to see what’s the one that is the most convenient for you. Imagine that you visit five banks in one day. For every bank that you visit, they’re going to pull your credit. That means your credit is going to get pulled five times in a matter of one day. The most efficient way to get this done is by bringing a copy of your own FICO score in order to shop around for a rate.
You’re not asking them to give you a pre-approval letter right from the get-go, you’re presenting them with your paperwork and if you simply disagree with the result, you move on to the next bank.
Once you have decided, “Okay this is the one and this is the winning bank that I want to work with,” then you’re going to go back to them once again with the same pile of paperwork and then you’re going to give them the permission to pull your credit.
In order for them to give you a pre-approved letter, they have to pull your credit because they have to verify that from their own source that you’re in fact creditworthy. Then once you get that, you can go out and talk to your realtor and tell him that you already have a pre-approval letter. That way, you are being efficient, to your realtor, you are efficient, to the bank and at the same time, you’re being kind to your own credit.
Purchase a Property: How do I get access to my FICO score without using Credit Karma?
That’s very simple. There are two recommended ways. You can either leverage those letters that you received from the bank when you recently approved a credit card. Ideally, you want the most recent FICO score, meaning, within the last month or so. Even if you don’t have a copy of the last month or so, six months is still reasonable.
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Don’t bring to the bank a letter stating your FICO score that is two years old, they’re not going to like that. If that’s not enough because maybe you haven’t applied for a credit card in a long time and you still want to get access to that FICO score, you should know how to get those copies.
In Experian you can definitely come into this website and then create an account for yourself. You can quickly click on Sign in and then if you don’t have an account, you can sign up for free into this website.
What they will do is that they will simply give you the FICO score for Experian. As you know, there are three different credit bureaus out there. Experian is one of them, TransUnion is another one, and Equifax is another one. In order for you to get access to all three FICO scores, what they will do is that they will charge you a fee for them to be able to provide a report with all three credit scores, but that’s not necessary. All you need to do, all you want to do is to be able to provide one score while you’re shopping around for interest rates, and that should be more than enough.
What they do is that they will give you a free credit report. Then your report gets refreshed every 30 days, You’re also going to get access to credit monitoring, and that will also give you surveillance in terms of your presence in the dark web for you to actually be on the lookout and see what’s going on.
As you can see, it is fairly simple. All you have to do to sign up is:
- Create an account with your name
- Your current address
- Your password
And that’s it, voila! You will get access to everything that’s related to your credit, you will get access to your Experian credit score, and then you print out a copy of that and you take it to the lender so you can shop for rates in a way that is beneficial for you and you don’t have to worry about credit being pulled all the time.
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