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One of the first things a savvy home shopper does PRIOR to starting a serious home search is to explore mortgage options.  Bruce Ailion is an experienced Realtor that will encourage buyers speak with a lender and get "pre-approved."  This benefits all parties involved by ensuring that prospective buyers can actually qualify for a mortgage on the homes they're interested in.  Failure to do so can cause frustration and disappointment for any agents or buyers who naively regard today's stringent mortgage process as a minor detail to be addressed after a sales contract is accepted.  No one likes surprises during the purchase process!  


Two terms that are often (and incorrectly) used interchangeably are "pre-qualified" and "pre-approved".  While their exact meanings will vary by lender, in most cases a pre-qualification is far less desirable and less clearly defined.

A Pre-Qualification typically means a buyer has spoken with a lender (who may or may not have pulled a credit report) and verbally discussed employment, liabilities, payment histories, and assets.  Actual verification of assets, income, and credit may not occur with a pre-qualification, and an automated underwriting system (Desktop Underwriter or Loan Prospector in most cases) likely has not been run.  While better than nothing, a Pre-Qualification remains entirely dependent on a far more thorough process of verification and examination of a borrower's credit, assets, and income.  At best, it's a "probably."

A true Pre-Approval, on the other hand, entails a strict review of the client's credit, down payment capacity, income, and asset documentation.  Credit reports are thoroughly dissected, rather than just credit scores verified.  Veteran loan officers run prospective buyers though underwriting engines if they have any doubts concerning debt ratios, derogatory credit items, or employment history/income verification.  Once the system returns an approval, it too needs to be read in detail, as it will list specific requirements for final loan approval.  A lender who bases his pre-approval on mere credit scores and underwriting engine approval without fully examining it, risks his reputation and the satisfaction of the other parties involved.

Unfortunately, the ambiguity between Pre-Approvals and Pre-Qualifications can cause mismanaged expectations.  For example, a client that came to me recently, saying he was pre-approved with another lender, and that his salary was $X/yr.  He had already identified a home and written a sales offer.  His debt ratios were tight, but, based on the information he provided, he met Fannie Mae's requirements.  Once his W2, paystubs, and tax returns were received, it became apparent that his "salary" included a number of incentives and other non-guaranteed items.  When I said we'd need to verify that the extra income was likely to continue with his employer, his comment was "the other loan officer didn't ask me to break my income down."  He also had two liabilities on his credit report that didn't show monthly payments, and needed to be determined.  When asked about those, he remarked that the prior lender hadn't mentioned them. Ideally, these issues are caught early enough in the process to address them, if not,  they can result in extra processing time that delays closing.

If all parties involved are aware of the distinction, it helps everyone play their role to the best of their ability.  The listing agent who calls the mortgage originator to ask if the buyer's income and asset docs have been examined clearly understands the differences between pre-qualifications and pre-approvals.  Conversely, the originator who contacts the Realtor can better manage expectations by clearly defining their pre-qualification or pre-approval process.  Even clients, armed with this information, can request a thorough pre-approval rather than a cursory pre-qual, and play a role in ensuring the best possible handling of their transaction.

Buying real estate property by obtaining a mortgage – Some steps you need to follow

by Audric Stevens- Financial and Contemporary writer


Do you want to buy real estate property? Well, if yes, then you need to have sufficient money for it. Possibly, you will not have the lump sum amount and thus, you require obtaining a suitable mortgage. These days there are several lenders who would offer you the loan at a reasonable rate. Thus, make sure you take out the mortgage rate at a low rate so that you can pay it off on time.

5 Steps to purchase real estate with a mortgage loan

 

You may take out a mortgage loan for purchasing real estate. Read on to know about the 5 steps for it.

 

  1. Know the exact value of your property - While searching for real estate is a daunting task, you should still buy one for yourself. It is important that you know the actual price of your real estate property. This will enable you to obtain the right mortgage loan for purchasing your property. Thus, you will be able to pay off the loan within the definite time period.

 

  1. Compare between the different home loans - When you want to obtain a home loan for your real estate, you should make it a point to compare between the different home loans. Since the different loans have different rates, try to choose the one that is affordable so that you may be able to repay it on time. Thus, you can live safely on your property.

 

  1. Shop for as many lenders as you can - If you come across a lender who will offer you the mortgage loan as per your requirement, you should not stop looking for the other lenders. Try to shop for as many lenders as possible so that you get to know what the different lenders are offering to the customers. This will enable you to take out the loan from a good lender.

 

  1. Seek help of a real estate expert - If you do not know much about real estate market, you probably will not be able to understand which property you should buy. As such, you can seek help of a real estate expert who will guide you through the entire process. He will also suggest you some good property that may suit you the best.

 

  1. Hire an agent to choose the right home loan - You may appoint an agent who will help you find the right loan for buying your real estate. You need to talk to your agent and tell him about your exact requirement. Since he deals with innumerable customers everyday, he will be able to suggest you with the most suitable mortgage. You will have to pay a certain amount of fees to your agent for helping you find the right property.

 

If you want to purchase real estate property but don’t have the needed bucks, see that you take out the right loan. Thus, you will have to follow the above-discussed steps in order to buy your real estate with a home loan.

 

Audric Stevens is a financial expert and a contemporary writer. He is involved in various online activities through which he imparts financial lessons to people with diverse needs. In addition to that, he is closely working with the ‘debtconsolidationcare community’ at the moment that has several interesting and prudent financial tips for people to use. If you like this article please follow us here.




 

Real estate mortgage tips for the novice home buyers- Strike the best deal

by Audric Stevens- Financial and Contemporary writer

Who doesn’t dream of owning a home in the heart of America? In fact most Americans nurture the dream of homeownership but very few are able to realize it. If you too have the same dream of buying your own home and let go of the hassles of renting an apartment, you’re not alone as there are hundreds of people who are going through the same situation. Buying a home can become an intimidating and a daunting task if you’re not aware of the steps that you should take in order to grab a home loan within your means. Home mortgages are secured loans that you have to take out by pledging your home as collateral to the loan and hence if you fail to make timely payments on your home loan, you will run the risk of losing your real estate property to a forced foreclosure. Here are some vital essentials that you need to take into account while buying a home in the United States of America.

  • Give a glance at your credit score: The most important document that the mortgage lenders will check is your credit score. Your credit score is a 3-digit number that speaks about your financial health, the way you’ve managed your finances in the past and whether or not you have a good and positive record of making timely payments. If you have a good credit score, it is most obvious that this will imply that you’ve been regularly making your payments in the past. But when you have a poor credit score, this will speak against you and will therefore bar you from getting a new line of credit at an affordable rate. So, improve your scores before approaching a mortgage lender.
  • Repay debts to reduce your DTI ratio: Apart from the 3-digit credit score, the DTI ratio is something that is also checked by the mortgage lenders.  The debt-to-income ratio gives the lender a ratio between your gross monthly income and the total monthly expenses that you make from your income. The more is your DTI ratio, the lesser will be your chances of snag a mortgage within your means. Therefore, you should either pay off your debts immediately or look for ways to boost your income in order to lower your DTI ratio. Take this step before approaching a mortgage lender.
  • Save enough money for paying the exact money down: You should save enough money for paying down the exact amount while taking out the mortgage loan. The required down payment is 20% of the loan amount that you’re taking out and unless you pay down the exact amount, it won’t be possible for you to avoid paying the PMIs or the Private Mortgage Insurance payments. The insurance payments will unnecessarily increase your monthly payments and therefore you should try to avoid it by saving enough money for the down payment.

Therefore, when you’re all set to seal the deal with a mortgage loan, you should take into account the above mentioned points. Don’t forget to test your shopping skills by getting multiple quotes from multiple lenders as without this you might just end up with the wrong loan. Compare the interest rates, closing costs and monthly payments before choosing the final one.

 

 

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The Ailion Team
RE/MAX Town and Country
2623 Sandy Plains Rd #202
Marietta GA 30066
404-978-2281
678-760-6266
Fax: 404-480-8448

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