Lauren Brooks' Blog
When you start looking for your dream home, you need to know how much mortgage you will qualify for. Your real estate agent might ask you to get a pre-qualification letter. However, just because you are pre-qualified doesn’t mean that you will get the loan. You need a pre-approval for that, and even then, the mortgage company might not approve your application.
A pre-qualification letter just tells you how much loan you can afford. The lender does not check your credit, your debt-to-income ratio or other factors before issuing a pre-qualification letter. Additionally, a pre-qualification letter is dependent on the information you provide to the lender. The pre-qualification essentially gives you an estimate of how much home you are able to afford so that you do not look at homes that are not within your range.
To get a pre-qualification, you supply the lender with your assets, debt and income. Because the lender bases its decision on the information you provide, rather than information from outside sources, a pre-qualification is not a guarantee that you will get the loan.
Getting pre-approved for a loan usually takes longer than getting pre-qualified. The lender pulls your credit report and might ask for additional documents, including tax records and bank statements. To get pre-approved, you must complete a loan application and provide your social security number. The lender might charge an application fee for a pre-approval.
With a pre-approval, you will have a closer interest rate assessment, that is usually not finalized until the loan goes through underwriting. Once the lender pre-approves you, it will send you a conditional commitment for the loan amount. You can look for homes at or below that price.
In a market when buyers bid against each other – a seller’s market – having a pre-approval letter might give you a step up with the seller, who will more likely choose an offer by someone more likely to get the loan. Thus, if you and someone else submit a bid on your dream home, but the other person only has a pre-qualification letter, the seller might accept your offer, even if it is not as good as the other buyer’s offer, simply because you are more likely to get the mortgage.
For a pre-approval, you will need to:
Complete the lender’s mortgage application;
Possibly pay an application fee;
Supply your social security number and allow the lender to pull your credit;
Provide financial information to help the lender make a decision; and
Tell the lender how much you plan to put up as a down payment.
After you are pre-approved and the seller accepts your offer, you will then have to provide the rest of the documentation to the lender, including the accepted offer, bank statements, retirement account statements, taxes for up to two years, proof of income and other documents that will help the lender come to a concrete decision.
Generally, the length of the homebuying journey depends on the individual. In some instances, a buyer will purchase the first house that he or she views in-person. Or, in other cases, it may take a buyer several weeks or months to find a house that matches his or her expectations.
There is no need to rush the homebuying journey. But if you know what to expect when you pursue your dream house, you may be able to seamlessly navigate the property buying cycle.
Now, let's take a look at three tips to help you streamline the homebuying journey.
1. Establish Homebuying Criteria
If you know where you want to live and what you want to find in your ideal residence, you can tailor your house search accordingly. And as a result, you may be better equipped than other property buyers to discover a great house at an affordable price.
As you put together homebuying criteria, it is important to consider your long-term plans as well. For instance, if you enjoy city life and want to spend as much time as possible in the city, a house in the city may be the right choice for you. On the other hand, if you want to raise your family in a small town, you may want to hone your search to houses in small towns.
2. Get Pre-Approved for a Mortgage
A home purchase likely will require you to obtain a mortgage. Fortunately, banks and credit unions are available nationwide, and these financial institutions can help you get pre-approved for a mortgage.
Meet with several banks and credit unions so you can learn about all of the mortgage options at your disposal. Then, you can select a mortgage and enter the real estate market with a budget in hand.
3. Hire a Real Estate Agent
If you're on the lookout for your dream home, you may want to hire a real estate agent. This housing market professional can keep you up to date about new residences that become available in your preferred cities and towns – and much more.
Typically, a real estate agent will do whatever it takes to help you find and buy your dream home. He or she initially will learn about your homebuying goals and develop a custom homebuying strategy for you. Next, a real estate agent will set up home showings and keep you informed about open house events. And if you discover your ideal residence, a real estate agent will help you craft an aggressive offer to purchase this house.
Let's not forget about a real estate agent's homebuying expertise, either. If you ever have concerns or questions during the homebuying journey, a real estate agent can respond to them. That way, you can gain the insights you need to make an informed home purchase.
Simplify the homebuying journey – use the aforementioned tips, and you should have no trouble finding and acquiring your dream house.
Preparing to list your home is a process, that when done correctly, can help you to achieve the best possible price as well as aid you in selling your home more quickly. Before you sell your home, there are a few small home improvement projects that you will want to have completed before your first showing.
Address Any Floor Issues
Carpet stains, worn areas, scratched wood, and crack tiles, can all be a turn off for potential buyers. If you have a newer carpet, performing a deep clean may suffice, but if it is older and worn, you should consider replacing it. Tile flooring should be replaced if cracked and if in good enough condition to keep, take the time to thoroughly clean the grout to get your floors looking like new. For hardwood floors, consider having them refinished so that they can look like fresh again.
Update Your Home's Hardware
Door knobs, drawer pulls, cupboard handles, and hinges can easily make a house look dated. This is an easy upgrade that can be made and requires little labor. Choose more modern designs and finishes and make sure that the theme is consistent throughout the room in your home.
Remove Popcorn Ceilings
If your ceilings are still covered in popcorn, now is the perfect time to be rid of it, to give your ceilings a more modern look. The good news with this improvement is that it will only cost you a little in ceiling paint and mainly requires time to complete. While scraping all of your ceilings may seem like a daunting task at first, you will be pleasantly surprised by how much it can change the look of the room.
Declutter Your Closets
Before you list our home, you will want it to seem as spacious, as organized, and as neat as possible. While most people know that closets are typically filled in most homes, when they are filled too much, it can make it hard to judge the available space. Declutter and get rid of anything that you no longer need. If your closets are still brimming, you may want to consider packing anything that you will not need until after your move and having it placed in storage.
Address Minor Repairs
Now is the ideal time to address any minor repairs that you have been putting off. Fix any plumbing issues such as clogs and leaks, repair any damage to walls and door frames, and replace any burnt out light bulbs. You want buyers to know that the house is well-maintained. It will make them more confident that major problems are less likely.
Tackle the small improvement projects above to get your home ready to list to help put you in the best position to get what you are looking for out of the sale of your home.
250 Walnut St, Framingham, MA 01702
When you make the decision to buy your first home, you should be certain that you’re ready to make the leap into homeownership. There’s many different things that you should do as a buyer to get ready before you even set out on the search of a perfect home.
Choose An Agent
You may think that one real estate agent is the same as any real estate agent that you’ll find. This is far from the truth. Some agents have certain specialties. The knowledge that an agent will bring to your house hunt is often invaluable. You are making one of the biggest purchases that you’ll ever make in your lifetime. While many buyers think that they can simply do an online search themselves to find a home, your realtor will have many more resources to assist you in finding exactly what you’re looking for.
Figure Out The Financial Portion Of Buying A Home
While knowing how many bedrooms you need and where you hope to live is important, understanding your finances is even more important. You’ll need to talk to a lender to get the process started. After looking at your own personal budget, you should get pre-qualified. Getting pre-qualified allows you to see a general number of how much house you can afford. That can help you start the process, however, there’s still a few more steps.
From here, you can do what needs to be done to get your entire financial picture ready to buy a home. This includes saving for a downpayment, improving your credit score, and continuing to keep up bill payments and consistent work history.
Next, you’ll want to get pre-approved. This allows your lender to dig into your financial picture. Everything from your credit score to your income and employment history will be considered. Your lender will then give you a more definitive number of how much you’ll actually be able to get for a loan when you buy a home. To get pre-approved, be prepared with 1099 forms, pay stubs, tax returns, and bank statements. You’ll then have the concrete amount that you’re approved for along with the interest rate that you qualify for.
Once You Have Applied For A Home Loan
Once you find the realtor to assist you and secure the home of your dreams, you’re not free to head out and buy all the furniture that you need to fill up your house. The home loan must go through the underwriting process and until that is complete, your finances are essentially on lockdown. If you start opening new credit cards, decide to buy a car, or fall behind on payments, you could end up in a lot of trouble. You want to keep your credit score stable throughout the process of buying a home for smooth sailing.