The Value of Pre-Qualification

Feb 6, 2017 | First Time Homebuyers, Lenders, Mortgage, Real Estate

For most home buyers, pre-qualification is the first step to buying a house whether you are ready to buy now or as you gather info to determine when you will be ready.  Here are three steps to help get you from pre-qualified buyer to homeowner.

Step 1: Pre-Qualification 

When preparing to buy a home, it is important to know how much house you can afford. The pre-qualification process is quick and free without taking much time at all. Speaking with a lender, you can help answer all necessary questions regarding your financial situation. With this info, the lender can determine how much house you can afford and give you a better idea where you stand when it comes to determining your buying capability.  Pre-qualification can be especially useful if you’re not sure you can afford a mortgage as the lender can also answer any questions you might have, as well. This step is crucial when deciding to buy a home and the Marr Team can provide a list of our preferred lenders to get you started!

Step 2: Pre-Approval

After you’re pre-qualified, your next step is to get pre-approved, which is more of an in-depth process. Your lender could ask you to submit paperwork about your income, assets, employment history and even your residency status. Getting pre-approved is almost like applying for a real loan, but it happens before you find the home you want to buy as you must have the pre-approval before making an offer.

Step 3: Shop & Offer

Home shopping time! You can shop for homes within your budget by using your pre-approval amount as a guide. Some sellers view pre-approved buyers more favorably, so with the help of the Marr Team you can now shop with confidence. Once you find a home you want to buy, we can help you put in an offer. If your offer is accepted, based on your pre-aproval you can then officially apply for the loan through your lender. This process will be faster since you have pre-approval because the lender will have just about all of your needed documents.

Don’t Forget: Keep everything “financially” steady! Be aware that changes in your financial situation can always affect your pre-approval. Like most loans, when you’re in the process of obtaining a home loan, do not take out any new debts or make big purchases, switch jobs, or make any big life changes that could affect your financial capabilities in question. If you’re looking to change jobs or buy something expensive, wait until after closing.

These are just a few of the major steps that show you the value of pre-qualification when preparing to buy a home. In the end, when those papers are signed, you can grab your new keys to your new home. Congratulations on becoming a Homeowner!

The Marr Team is here to help you every step of the way. Be sure to ask us about our buy/sell discounts, our preferred lender list, and if it applies, our first time home buyers guide! We have extensive resources to help make the home buying experience the BEST it can be!

Preparing to Buy a Home in 2017

Jan 5, 2017 | Lenders, Real Estate

Are you looking to buy a home in 2017?

Here are some great tips from one of our preferred mortgage lenders, Andy Butler with First Bank that will make the process less stressful and help get the best rate:

 

  1. Speak to a lender early!  Don’t wait until you are ready to start looking at homes before contacting a lender.  If you plan on purchasing in the June or July, contact a mortgage lender and get pre-qualified in January or February. There are numerous benefits to starting the process early.  First, this allows the lender to pull a copy of your credit report and gives you time to address any  discrepancies that may appear on the credit report.  It also allows the lender to help you come up with a game plan to pay down some debt if that will be needed in order to qualify for the price range you want.  And it also gives you a little more time to prepare your savings account for the necessary down payment on the mortgage.  by start the process early, you can eliminate much of the stress the mortgage process can generate.  Most mortgage rates are impacted by credit score so by starting the process early, you have more time to get your scores up as high as possible by the time you are ready to lock in a rate.                                                                                                                                                                                                      
  2. Get a referral. Since the real estate crash of 2008, the mortgage world has transformed into a complex set of rules and guidelines that has very little flexibility.  And when you add in the fact that the rules are constantly being updated and changed, finding a qualified, dedicated mortgage professional becomes even more important.  Talk to family, co-workers, and friends and ask them who they used when they closed on their last mortgage and then ask if they would use that mortgage lender again.  Finding a local lender that knows your market is a big plus.  Each state has its own unique rules and requirements so it’s best to find a lender in your state and even better, in your city or town.  Then ask for an appointment and go meet your prospective lender.  You are about to entrust this person with a lot of personal and financial information and a face to face meeting will help instill a level of trust or may lead you to interview another lender.                                                                                                                                                                                                                                                                                                                
  3. Two sides to every coin. While everyone loves a low rate and while it may give you bragging rights at the office, it is very important to understand the COST of a certain interest rate.  Lenders love to clog the internet with advertisements that show a super low interest rate but rate is just part of the equation.  You won’t know if you are getting a good deal until you know more about the mortgage that is attached to that rate.  Is it a fixed rate or an adjustable rate?  What is the term of the loan- 10, 15, 20 or 30 yrs?  And most importantly, what is the COST of that rate?  Lenders can charge additional “points” to buy down an interest rate.  When someone says “1 point” in the mortgage business, they mean 1% of the loan amount.  So if you are paying 2 points on a $250k mortgage, that’s an extra $5k in closing costs that you are paying in order to lock in a certain interest rate.  And that cost is money that you have to pay out of pocket, at closing.  If you are considering buying an interest rate down, as the lender to run a “break even” calculation which will tell you how long you have to keep that mortgage before the cost of the lower rate pays for itself.  You may be surprised at the answer as typically it can run from 7-10 yrs.                                                                                                                                                                                                                                                                             
  4. Understand the process. Once you have found your lender, have a conversation with them and ask them to explain the mortgage process to you.  Knowledge is power and the better you understand the process, the less stress you will have and the better the experience will be for you.  There is a method to how the loan is processed and what tasks must be completed in what order.  By understanding this process, you can be better prepared to assist the lender if they need additional documentation as the loan is processed and underwritten.  Which leads to our next tip…..                                                              
  5. Be a team player.  Understand that you and the lender are on the same team and you need to take an active role in assisting them get what is needed to close the mortgage.  As mentioned above, mortgages have very detailed underwriting requirements and you should expect that the underwriter may need additional documentation to support income or more likely, assets.  Since the introduction of the Patriot Act, lenders are now required to source non payroll deposits that meet certain criteria.  If your mortgage professional asks for documentation to show where a deposit came from, don’t think there is anything wrong with you or the mortgage- it’s a common requirement.                                                                                                                                                  
  6. Tread water. When it comes to anything involving your credit report, once you write a contract on a home, don’t open new credit or put any additional charges on your existing credit.  And as silly as it may sound, don’t make any large payments on your existing credit without checking with your loan officer first.  All mortgage companies are required to pull an updated copy of your credit report a couple of days before closing and adding any additional debt to your credit profile before you close on your new home can wreck the mortgage.  And as attractive as the 0% interest offer from the furniture or appliance store is, don’t even apply for their credit offer until after you close on the home.  The mortgage graveyard is littered with loans that never closed because of Nebraska Furniture Marts once in a life time sale that happened the weekend before someone was supposed to close on their new home.

Following these tips will help you land a mortgage in 2017. Give the Marr Team a call at 214-620-0411 to help you find that home to buy!

 

Special thanks to our guest writer, Andy Butler , NMLS# 803225. 

For more information or if you have any questions on lending;

contact Andy with First Bank at 469-277-3538 or at abutler@firstbankweb.com