Be Pepared

Weather you are a first time home buyer or a seasoned investor, when it comes to buying a house you have to be prepared. It is more important than ever in these days of tightening mortgage standards to be pre-approved or have a proof of funds letter form your bank.

A proof of funds letter is what you will need to provide most sellers when you are buying a home with cash. This can be a bank statement a deposit receipt, or a balance sheet. I recommend an updated letter from your bank on their letterhead stating you have the available funds (have them state your desired purchase price on the letter). Also put a contact number and person at the bank in case the listing agent needs to verify the information.

If you are getting a loan, you have to have a pre-approval letter. You can continue to shop around to find better rates. The letter does not lock you in yo using that lender but does let the seller know you have been conditionally approved and passed the credit approval and initial steps.

Same as with the proof of funds letter, have it placed on the lender letterhead with the loan amount, contact person and phone number. (Hint for buyers: Get a pre-approval letter for each offer you write up to the amount of the loan. i.e... if you write an offer for $100,000 have your pre-approval for $100,000 even if you qualify for $125,000. If you are looking at a $115,000 house and your lender writes a letter saying you are qualified for up to $125,000 and you put in an offer for $100,000 what do you think the seller is going to do?) You need to call me ASAP if you need help with this answer.

Also, if you are thinking of buying a foreclosure it is imperative you have one of these types of proof of ability to purchase otherwise most banks will not even look at the offer you submit.

Until next time, happy hunting.