This is when a home seeker applies for a mortgage before finding the home. The loan agent gathers the necessary documents, including the loan application, credit report, income assessment, and submits them to the underwriter. They then issue credit approval or denial.
Unlike preapproval, prequalification is not a loan commitment it is simply an opinion that a home seeker should be able to get a mortgage.
Remember, while an important tool for the home buyer, pre approval and pre qualification are not absolute - lenders still ned to perform other assessments and verifications before finalizing the loan.
If you have spoken with me or watched one of my YouTube videos you know that in order to view homes you must be pre-qualifed, preferably pre-approved. Pre-qualification is a must to not only know how much home you can afford but also discovering if you are comfortable paying that amount. For example, you may approve for a $400,000 home but you feel comfortable with a mortgage of a $315,000 home. It's also great to have that lender relationship started so you can get all of your loan/mortgage questions answered.
Homebuyers typically have one hurdle that that they hate to cross: THE PAPERWORK needed to apply for a loan. Trust me, I hated it too. But its a necessary evil and the more organized you are the smoother your home purchase will go.
Here are two list to help you get started.
That's it! Super short list, which is why getting pre-qualified is super fast and easy.
Once you get pre-qualified you must then submit the documents below to support the information that you provided to the lender for Pre-Approval.
*Additional documents may be required by your lender.
The list can be daunting to tackle but luckily technology of online banking can make this easy.
As always, I am a phone call, text, or email away if you, or someone you know, has a real estate question.Ashley Jamerson, Realtor/Owner of Jamerson Realty an Ashley Lambert Realty CompanyCall/Text: (980) 319-3664 Email: Hello@myagentashley.com
1. Figure out what your ‘perfect home’ looks like. Write down on a piece of paper all of the things you must have in your new home, things that would be nice to have and things that don’t really matter. Keep this list with you when we go out and view homes to keep your search on task.
2. Purchase a home that stays in budget. Make sure to get pre-approved for a loan before going out to look at houses. It will make the buying process much easier and you will know which houses to look at. Falling in love with a home you cannot afford is heartbreaking and makes your home search more stressful as you look for the non-existent purple giraffe.
3. Bigger isn’t always better. While we all dream of having a huge mansion, it’s good to think about what will be best for your family. Figure out how many rooms you need to fit your family comfortably and look in that range. If you are closed minded to a certain square footage you could miss out on a well laid out home that feels larger.
4. Think about remodeling. Many homes you will look at may not be in the best condition, but think about the potential of the house. Would painting and new wood floors turn it into your dream house? How about a kitchen or bathroom remodel? There are many easy fix-ups such as adding new light fixtures and painting that can turn your house into the perfect home. Never be afraid of a little sweat equity to make a house a home.
5. Location is important. Check the surrounding area of the home. Drive around the 2 mile radius to see what is around your home. Make sure it is in an area you feel comfortable with. Find out what school district you’ll be in. Even if you don’t have kids, you may want to think about the school district you live in for resale. You may also want to take the commute to your work and see how long it will take you. I like to scope out the local grocery stores, nail salons, dry cleaners, gyms, and other “life necessities” near the home because there is nothing like having these places a short drive or bike ride away.
6. Do your research. Research property values in the area. Stalk your neighborhood and find out what it’s like at all times of the day. Is it a family friendly neighborhood? You could even knock on the neighbors doors before buying. I have done that.
7. Do a home inspection. The home inspector will look at everything in a home and give you a non-bias opinion. They will also tell you the true value of the home you are looking at. It’s better to spend a couple hundred dollars doing a home inspection then finding out the house had several problems. As a buyers agent I often attend the home inspection to get a better understanding of the inspection results.
8. Picture your family living in the house. When you walk into the home, can you picture your family living there? Does it have a good feeling? Picture your family living in each room and see you how feel.
9. Leave room to grow. Make sure your ‘perfect home’ has extra storage and gives you room to grow. Thinking of getting married, having a baby, or starting an at-home business in the next few years? Don’t outgrow your home prematurely.
10. Don’t put your expectations to high. Realize that most houses aren’t perfect to begin with. Even if you are building your dream home, there are always things that could have been different. Be flexible. Once you move in and add your own style it will soon become your dream home.
1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.
2. Develop your home wish list. Then, prioritize the features on your list.
3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.
4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price.
5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.
6. Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or ARMs — and decide what’s best for you.
7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.
8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.
9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.
10. Contact a Ashley Lambert, an experienced REALTOR® who can help guide you through the process.
Here are the current interest rates. They are still steady from last week. I partnered up with an new lender, Marcus Butler of Guranteed Rate. For pre-qualification in 15 minutes or less please visit: www.guaranteedrate.com/marcusbutler.
As always I am here to assist you with all of your real estate needs. Feel free to reach me at (980) 319-3664 or visit www.MyAgentAshley.com for more information about the home buying process.