Pre approval..Why?

The third week of July has brought once again record low interest rates. Getting a mortgage in 2010 is different than in prior years. It takes expertise to navigate the mortgage process. The key to a successful and great mortgage experience is EDUCATION. When I meet with a potential client I take the time to educate them on what to expect and I review all of their paperwork so that we can prepare for whatever would come up. Home buying, especially the first time homebuyer is the foundation to the healing of the economy. When someone buys a home, they move, they fix the home and garden, etc. They use the services of contractors, gardeners, and movers. They shop at hardware stores, furniture stores and the vast and sundry retail and discount stores that sell household items. This causes an economic ripple affect that’s stimulates the economy. Buying a home, though, can be real scary especially today with all the negative news. A first time homebuyer may be scared to take themselves this huge step.

The questions that come up are often, are, what does it mean to be “qualified” for a mortgage? How can a mortgage professional determine if a person(s) qualifies for a loan?
What does the process entail? What steps can a person take to ensure that they will qualify for the best mortgage rate available? How can a person determine if they are being approved for the best mortgage program possible? Why is it important to know what your taxes will be and why is it important to have your credit checked?

Well let’s start with the basics. When you are thinking about buying a house it is very important to first be pre qualifies/pre approved for a mortgage. This is important for the buyer but even more important to the seller. For the buyer because they should know if they can get a loan before they look for a home and spend money on inspections and attorneys etc. For the seller, I believe it is actually more crucial. When a seller accepts an offer, they take their home off the market. They sign contract with their potential buyers. If those buyers don’t get a mortgage, they have lost precious time in marketing their home. They have lost the opportunity of showing the home to a broader range of potential buyers. This can cause for the seller to lose thousands and tens of thousands of dollars. I recently closed a mortgage loan for a buyer who purchased a home for $540,000. This home had been in contract previously with an unqualified client. The home had been off the market for 6 months while the buyer tried to get a mortgage, The attorney for the buyer kept on requesting commitment extensions. The buyer actually had applied to three lenders and was turned down by all three. The seller was in a terrible financial situation. They had to move to another city. The husband had been out of work and finally got a job. It was for less money and he could not commute. Their credit had been compromised; they couldn’t afford to keep the house. It had originally been under contract for $610,000. It was 10 years old, 3,600 square foot colonial. They put it back on the market for a “quick sale” and my customers purchased the home for $540,000 as long as they guaranteed a 30-day closing.