Posted by Marie Presti on 2/24/2019

If youíre a first-time homebuyer, odds are youíve thrown the words ďprequalifiedĒ and ďpreapprovedĒ interchangeably. However, when it comes to home loans, there are some very important differences between the two.

For buyers hoping to purchase a home with a few missteps and misunderstandings as possible, itís vital to understand the procedures involved in acquiring financing for a home.

Today, weíll break down these two real estate jargon terms so that you can go into the mortgage approval process armed with the knowledge to help you succeed in securing a home loan.

Mortgage prequalification

Letís start with the easy part--mortgage prequalification. Getting prequalified helps borrowers find out what kind and what size mortgage they can likely secure financing for. It also helps lenders establish a relationship with potential customers, which is why you will often see so many ads for mortgage prequalification around the web.

Prequalification is a relatively simple process. Youíll be asked to provide an overview of your finances, which your lender will plug into a formula and then report back to you whether or not youíre likely to get approved based on your current circumstances.

The lender will ask you for general information about your income, assets, debt, and credit. You wonít need to provide exact documents for these things at this phase in the process, since you have not yet technically applied for a mortgage.

Prequalification exists to give you a broad picture of what you can expect. You can use this information to plan for the future, or you can seek out other lenders for a second opinion. But, before you start shopping for homes, youíll want to make sure youíre preapproved, not prequalified.

Mortgage preapproval

After youíve prequalified, you can start thinking about preapproval. If youíre serious about buying a home in the near future, getting preapproved will simplify your buying process. It will also make sellers more likely to take you seriously, since you already have your financing partially secured.

Mortgage preapproval requires you to provide the lender with income documentation. They will also perform a credit inquiry to receive your FICO score.

Mortgage applications and credit scores

Before we talk about the rest of the preapproval process, we need to address one common issue that buyers face when applying for a mortgage. There are two types of credit inquiries that lenders can perform to view your credit history--hard inquiries and soft inquiries.

A soft inquiry wonít affect your credit score. But a hard inquiry can lower your score by a few points for a period of 1 to 2 months. So, when getting preapproved, you should expect your credit score to drop temporarily.

After preapproval

Once youíre preapproved for a mortgage, you can safely begin looking at homes. If you decide to make an offer on a home and your offer is accepted, your preapproval will make it easier to move forward in closing on the home.

Once the lender checks off on the house youíre making an offer on, they will send you a loan commitment letter, enabling you to move forward with closing on the home.




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Posted by Marie Presti on 12/2/2018

Applying for a mortgage may seem like a long, stressful process at first. Fortunately, we're here to help you take the guesswork out of submitting a mortgage application.

Now, let's take a look at three tips to help you streamline the mortgage application process.

1. Ask Questions

A bank or credit union likely will ask you to provide a wide range of information as part of the mortgage application cycle. And as you complete a mortgage application, you may have questions along the way too.

Remember, a lender is happy to help you in any way possible. If you ever have concerns or questions as you complete a mortgage application, you should reach out to a lender for expert support. That way, you can reduce the risk of potential problems down the line that otherwise could slow down the mortgage application process.

Even a single mistake on a mortgage application may prevent you from getting a mortgage. Perhaps even worse, a delayed mortgage application may force you to miss out on an opportunity to acquire your dream house. But if you reach out to a lender as you complete your mortgage application, you can gain the insights you need to quickly and effortlessly finalize the necessary documentation to obtain a mortgage.

2. Be Thorough

A mortgage application may require you to look back at your financial and employment histories and provide information that a lender will use to determine whether to approve or deny your submission. Meanwhile, you should be ready to provide a lender with any requested information to ensure a seamless application process.

As a homebuyer, it is your responsibility to include accurate information on your mortgage application. In fact, failure to do so may cause a lender to reject your mortgage application. If you allocate the necessary time and resources to dot every I and cross every T on your mortgage application, you can boost the likelihood of a fast approval.

3. Shop Around

For homebuyers, it is crucial to check out all of the mortgage options that are available. If you meet with a variety of banks and credit unions, you can review myriad mortgage options and select a mortgage that complements your finances.

Banks and credit unions generally provide a broad array of fixed- and adjustable-rate mortgages. If you learn about all of the mortgage options at your disposal, you can find one that enables you to purchase your dream house without breaking your budget.

Of course, once you are approved for a mortgage and are ready to launch your house search, you may want to hire a real estate agent as well. A real estate agent will offer plenty of guidance at each stage of the homebuying journey. In addition, a real estate agent can make it easy for you to find a top-notch residence at a budget-friendly price in any housing market, at any time.

Start the mortgage application process today, and you can move one step closer to acquiring your dream residence.




Tags: mortgage   buying a home  
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Posted by Marie Presti on 11/25/2018

Going through the process of applying for a mortgage only for your application to get denied can be a frustrating and confusing time. If youíre hoping to buy your own home in the near future, itís vital to secure financing or you risk missing out on a home that you may have been depending on getting.

In todayís post, weíre going to talk about what happens when your mortgage application is denied and what you can do to fix the problem as quickly as possible.

Determine the Cause of Denial

If your application is denied, priority number one needs to be to understand what happened. Since lenders are required to provide denied applicants with a letter explaining why they were denied, this just means reading the letter and making sure you understand all of the reasons listed.

There are a few common reasons that an application may be denied. Some of them are simple fixes, while others might require time and effort on your part that may delay your house hunt for a while.

One issue that many mortgage applicants have to handle is when their employer wonít provide proof of income to a mortgage lender. Since income verification is vital to the mortgage application process, itís important to make sure you can provide all of your income details from the last 2 years to the lender.

Sometimes there are issues with contacting employers, such as when your former place of employment goes out of business. Or, you may be a freelance or contract worker with atypical forms of income verification. Regardless, make sure you are clear with your loan officer regarding your employment history.

Other common causes for denial of an application include problems with your down payment (such as not meeting the required down payment amount) and credit history issues, such as having a lower score than you thought.

Credit score lower than expected

Itís not uncommon for a lender to run a credit check and come up with a score that is lower than you anticipated. Since scores change on a monthly basis, and since there are differences between the scores provided by the three major credit bureaus, you might find that your lender found a score slightly lower than what thought.

If the score is drastically different, however, this could be a sign of two things. First, make sure that you havenít recently made multiple credit inquiries (such as applying to several lenders who perform credit checks) or by opening new credit cards or loans. These inquiries temporarily lower your credit score.

If you havenít recently made any inquiries (other than applying for a mortgage with your lender of choice), then itís a good idea to get a detailed credit report and scrutinize it for errors. Inaccuracies on your credit report can be disputed and resolved and can give your score the boost you need to be competitive on your mortgage application.  

Choosing a different lender

While most lenders use similar criteria in determining your borrowing eligibility, there are some differences between lenders.

For example, some lenders might take on more risk by lending to someone with a lower credit score. However, they will also likely require a higher interest rate in exchange for the added risk theyíve acquired.


Now that you know your options for what to do when an application is denied, youíre well-equipped to start tackling the issue and getting back on track to becoming a homeowner.





Posted by Marie Presti on 8/5/2018

Getting a mortgage is one of those things that everyone seems to have quite a bit of advice about. While people surely have good intentions, itís not always best to take the buying advice of everyone you meet. Below, youíll find the wrong kind of mortgage advice and why you should think twice about it. 


Pre-Approvals Are Pointless


Getting pre-approved for a mortgage can give you an upper hand when it comes to putting in offers on a home. Even though a pre-approval isnít a guarantee, itís a good step. It shows that youíre a serious buyer and locks you in with a lender so they can process your paperwork a bit more quickly when you do want to put an offer in on a home. 


Use Your Own Bank


While your own bank may be a good place to start when it comes to buying a home, you donít need to get your mortgage from the place where you already have an account. You need to compare rates at different banks to make sure youíre getting the best possible deal on a mortgage. Youíll also want to check on the mortgage requirements for each bank. Different banks have different standards based on down payment, credit scores and more. Youíll want to get your mortgage from the bank thatís right for you and your own situation. 


The Lowest Interest Rate Is Best


While this could be true, itís not set in stone. A bank with a slightly higher interest rate could offer you some benefits that you otherwise might not have. If you have a lower credit score, or less downpayment money, a bank offering a higher interest rate could be a better option for you. Low interest rates can have some fine print that might end up costing you a lot more in the long term. Do your research before you sign on with any kind of bank for your mortgage. 


Borrow The Maximum


Just because youíre approved for a certain amount of mortgage doesnít mean that you need to max out your budget. Itís always best to have a bit of a financial cushion for yourself to keep your budget from being extremely tight. When life throws you a curveball like unexpected medical bills or a job loss, youíll be glad that you didnít strain your budget to the end of your means. Even though the bigger, nicer house always looks more attractive, youíre better off financially if youíre sensible about the amount of money you borrow to buy a home.




Tags: mortgage   mortgage rates   bank  
Categories: Uncategorized  


Posted by Marie Presti on 6/17/2018

If youíre finding that your finances are a bit tighter these days, you might need to adjust your budget a bit. Have you ever thought about alternatives in helping you to pay your mortgage? Thereís a few things that you might be able to do in your home to save a few bucks and be more comfortable with your budget and finances. 


Share The Space


This might sound crazy, but it works for many people. If youíre willing to share your living space with others, it could help you to make a dent in your mortgage. This works especially well if you have a home with a separate entrance like an in-law apartment or something similar. 


Make Adjustments To Your Expenses


There are many different costs that come along with owning a home. If you reduce some of these expenses, youíll be able to cut your overall spending. You donít need to completely adjust your entire way of living to do this. Some ideas:


  • Cut the cord on cable and install streaming devices
  • Go on a family cell phone plan
  • Skip the gym membership
  • Use public transportation
  • Cook at home instead of eating out
  • Use coupons


Put Tax Refunds To Good Use


If you normally get a tax refund, you can apply that money to your mortgage instead of using it to buy something else. You could also adjust your withholdings. This would allow you to get a bit more money in your paycheck each week. Youíll get less of a refund during tax time, but the extra money may help you to pay down bills throughout the year. 


Pay More Towards The Principal 


To make the most of your hard-earned savings, use your money wisely and pay down the mortgage faster. Just be sure that thereís no penalty for a prepayment of the loan. You can either make an extra loan payment each month or you can pay a bit over what you owe on the mortgage each month. If you pay the mortgage faster, youíll save potentially thousands of dollars in interest over the life of the loan. Youíll need to check with your mortgage company to see what their process is for paying more towards the principal of the loan. Keep in mind that the first few yearsĎ worth of your mortgage payments will be going towards interest unless you specify extra payments to go elsewhere.


Whether youíd like a little more of a financial cushion or are just looking to get rid of all those pesky monthly bills, itís never a bad idea to focus on paying your mortgage down as quickly as possible.




Tags: mortgage   finances  
Categories: Uncategorized  




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