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When someone is pre-qualified this typically mean they have told a loan officer how much income is coming in, how much money is in the bank, and the state of their credit. Based on the information a loan officer can calculate the approximate price range for that scenario. However, just because they are pre-qualified for a certain amount does not mean that is the actual amount a person would be able to purchase. Getting pre-approved is the best way to know what you can purchase. By providing the items needed to get pre-approved you can rest assured there will not be any surprises later in your transaction. Benefits of Pre-Approval The person who approves your loan is the Underwriter. Because the Underwriter has final say on your loan, it is important to get your documents to this person as soon as possible. When you initially call and tell the loan officer your scenario there is fairly good idea of what you could buy based on that information. The next step will be to pull a credit report. How to get Pre-Approved The following items are needed for pre-approval:
Once these items are collected, the loan officer will have a complete file to turn in to an Underwriter. The credit report will be pulled to make sure your credit is acceptable to the loan program you are applying for. Seventy percent of the time a credit report has inaccurate information that could hurt your chances of approval. Because of this strong possibility it is very important to get your credit pulled quickly. As long as there is time to fix the inaccurate information before your closing then there is not much concern. However, there can be surprises that you were unaware of such as:
Another benefit to pre-approval is clarification of employment. If you tell your loan officer that you make $30,000 annually, but not that $5,000 of that is from overtime and $2,000 was from a bonus there could be an issue. Typically there has to be a two year history in order to count overtime and bonuses. The same is true for commissions. However, even if there is not a two year history the amount you have received can be divided over a two year period and we can often use that average. Lets pretend you pick up the phone and tell the loan officer, “I make $50,000 a year and I only have a $100 monthly credit card debt”. The loan officer is likely to tell you that you are pre-qualified for $185,000 home. However, what if that $50,000 is from commission and not salary and you have only been on the job for a year? Now we have a problem because there is not a two year history of making $50,000. So maybe the Underwriter allows us to divide the $50,000 over two years and now we have $25,000 in income. Now you are pre-qualified for a home priced around $100,000. Big difference from what you were originally pre-qualified for. Based on the fact that a pre-qualification leaves too much room for error it is important to get pre-approved before looking for a home. Pre-approval will analyze your documents and assure you that you are looking at what your budget will truly allow. Do not take chances with disappointment and frustration, only base your home search off of your pre-approval. Getting pre-approved is the best way to know what you can purchase. By providing the items needed to get pre-approved you can rest assured there will not be any surprises later in your transaction. Was this information helpful? Please give us feedback by calling 480-217-7440. Thank you! CLOSING COSTS The bundle of fees associated with the buying or selling of a home are called closing costs. Certain fees are automatically assigned to either the buyer or the seller; other costs are either negotiable or dictated by local custom. Buyer closing costs When a buyer applies for a loan, lenders are required to provide them with a good-faith estimate of their closing costs. The fees vary according to several factors, including the type of loan they applied for and the terms of the purchase agreement. Likewise, some of the closing costs, especially those associated with the loan application, are actually paid in advance. Buyer typical closing costs
If the seller has not yet paid for the house in full, the seller's most important closing cost is satisfying the remaining balance of their loan. Before the date of closing, the escrow officer will contact the seller's lender to verify the amount needed to close out the loan. Then, along with any other fees, the original loan will be paid for at the closing before the seller receives any proceeds from the sale. Seller typical closing costs
Prorations At the closing, certain costs are often prorated (or distributed) between buyer and seller. The most common prorations are for property taxes. This is because property taxes are typically paid at the end of the year for which they were assessed. Thus, if a house is sold in June, the sellers will have lived in the house for half the year, but the bill for the taxes won't come due until the following year! To make this situation more equitable, the taxes are prorated. In this example, the sellers will credit the buyers for half the taxes at closing. Negotiating Closing Costs In addition to the sales price, buyers and sellers frequently include closing costs in their negotiations. This can be for both major and minor fees. For example, if a buyer is particularly nervous about the condition of the plumbing, the seller may agree to pay for the house inspection. Was this information helpful? Please give us feedback by calling 480-217-7440. Thank you! THE MORTGAGE TEAM and WHAT THEY DO Loan Officer (Mortgage Broker) - This is the person who will meet with you to discuss your program options and recommend to you the best program to meet your needs. The loan officer will then take your loan application and follow it through to the actual settlement or closing. Was this information helpful? Please give us feedback by calling 480-217-7440. Thank you! Bachelor of Science in Marketing Privacy Notice: Your personal information is confidential and will not be sold to a 3rd party, or used for any other purposes without your consent. Not for a $1, and not for a $1million. Any information you provided will be used for No Hard Copyright & Trademark Notices: No copying of any information or design from this website without prior written permission. We go after any violations and violators with vigor. You will earn our copyright attorney's attention! Just in case you are uncertain about copyright and trademark laws, visit www.copyright.gov No Hard
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