A True Credit Check

It’s summer and you are searching for a second home in Door County . Congratulations on joining the fortunate multitude who have never regretted that decision. Perhaps you have owned your home for ten or more years elsewhere or maybe this is the first time you have had to finance something for quite some time. In any case, knowing your credit history should be your first priority.

Unless you’re paying for your new investment in cash it is a wise move to begin your Door County Real Estate search by getting pre-approved for the amount you have to spend on your real estate investment. Knowing your credit score will accomplish many things. The most important thing it should establish is your peace of mind.

True story: three days before a scheduled closing my customer calls and says there has been a situation with the loan papers and they won’t be able to close. They have already signed-off on all of their financing contingencies so they MUST be ready to purchase on the date set for closing or they risk losing the property. Here’s what happened: the Sellers, being an understanding lot, agreed to postpone closing for a week while the Buyer’s lender straightened the situation out. The snafu was the Buyer’s credit report had previously gone unchecked. Their credit was perfect but someone else’s clerical error at the credit reporting bureau nearly cost these buyers thousands of dollars in legal fees and their Door County getaway.

Finding that your credit history is in one piece is as simple as logging onto a website. There are three credit reporting bureaus that report to a majority of lenders throughout the world. They are Experian, Equifax and TransUnion. All of them have websites. Using TransUnion as our example, simply type the TransUnion address into your web browser to get started. Their address is http://www.tuc.com/

To obtain your credit score and sign up for monthly updates go to their True Credit portion of their website. For a mere $9/year you will get a monthly update on your individual credit. To give an example; if you sign-up for a new cellular phone, they check your credit. That check affects your overall rating. You will be notified of that check through the website. If you have a snafu with your reporting agency and it negatively impacts your credit rating, you know about it first thing. The website for this service is http://www.truecredit.com/

Here is something to consider for your transaction. Now that you have taken charge of your financial well being and you have visited your local lender to see how much you have to spend, they will give you a pre-approval letter of credit. This states how much you have to spend. This is a very good thing for you to share with your real estate agent and will be treated confidentially when you request it be so treated. This next part is important however as you want to be sure you don’t get carried away.

When you find your property and make your offer to purchase be sure to request that your preapproval letter does NOT get submitted with your offer to purchase. Your offer to purchase clearly states that by doing so you would essentially waive your financing contingency entirely.

Buyer’s delivery of a copy of any written loan commitment to Seller shall satisfy the Buyer’s financing contingency unless accompanied by a notice of unacceptability. CAUTION: NEITHER BUYER, LENDER OR AGENTS OF BUYER OR SELLER SHOULD DELIVER A LOAN COMMITMENT TO SELLER WITHOUT BUYER’S PRIOR APPROVAL OR UNLESS ACCOMPANIED BY A NOTICE OF UNACCEPTABILITY (Residential Offer to Purchase WRA Form).

Your agent will clearly explain this to you when you draft your offer. Sharing the fact that you are preapproved and proving that with a letter to the REALTOR is all you need to mention. Your bank, or local lending institution, will want to know that other factors affecting financing such as well tests, home owner association documents and an appraisal are all up to speed before granting final approval. Being preapproved is an outstanding hurdle to have out of the way as you shop for your Door County real estate dream. It is not the final piece of the puzzle but it will give you peace of mind. Good luck and happy hunting.

Kevin Nordahl is a life-long resident of Door County, a REALTORŪ and a member of the Door County MLS. He is a Past President of the Door County Board of REALTORS® and a Senior Sales Consultant at Coldwell Banker Door County Horizons in Fish Creek. He may be reached online at knordahl@doorcountyrealestate.com or by phone at (920) 493-4004.

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