Tag Archive for Preapprove

How to Leap Those First-Time Buyer’s Hurdles

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First-time home buyers have plenty of obstacles to overcome. There is an intricate maze of details that need to be carefully navigated.

Following are 5 obstacles that first-time buyers have to overcome when looking to buy a home:

Down Payment:

Saving enough for the down payment is not sufficient. Closing costs must also be considered. Closing costs are additional fees such as the lawyer’s fees, escrow charges, appraisal fees, financing fees and utility adjustments. A good rule of thumb is 2% of the purchase price will cover the closing costs. So for a $200,000 home with a 5% down payment, you would require $14,000 to cover both the down payment and closing costs.

Mortgage Pre-approval:

Many first-time home buyers overlook the pre-approval process. This mistake can cost you your dream home. Visit a mortgage professional to see what kind of mortgage you qualify for and closely examine the actual cost of the money you must borrow to purchase a home.

Use a Real Estate Agent:

Some home buyers think they can go it alone. Buying a home is a complex legal process, and buyer representatives have the knowledge and know-how to make your home-buying experience a happy one.

Know the Difference Between What You Need and What You Want:

It is fine to dream big, but the home-buying process can be very frustrating when you have a $200,000 budget and $500,000 taste. It is essential to the buying process to identify what your home must have and what you would like it to have.

Believe in Yourself:

It seems that when you are buying your first home, everyone has an opinion about the purchase. This can be confusing because unsolicited advice clouds your decision. Believe in your ability to assimilate the facts, look at the property and decide what to buy.

We know that the home buying process can seem daunting and we are here to simplify it. Guidance Realty Homes is your complete solution for buying or selling a home. Plus you can earn a rebate off the sales price when using our agents.

 

2 Vital Terms Every Homebuyer Must Know

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Pre-qualified and pre-approved are two common terms you hear when it comes to getting a mortgage.

But it’s important to know they are very different things.

 

Prequalification

A prequalification takes 15 to 30 minutes and involves a few quick questions usually.

You typically do this before you look for a home.

At this point, the lender takes your word that everything you state is correct and will verify it at a later date.

A credit check is run, then all the information provided is put through an automated underwriting system, which will provide a preliminary status.

At the end of the process you’ll have an idea of how much money you can borrow, and often you will be issued a prequalification letter that states that a credit check has been run and, based on the information provided but not yet verified, you qualified for a specific dollar amount.

Real estate agents will often ask for prequalification letters in the same amount of an offer they intend to submit on a property.

Sellers, knowing that a buyer can afford much more than they are asking for a property, will be less likely to negotiate downward or offer concessions.

 

You can also Pre-qualify in 10 minutes with Guidance Residential, the preferred financing provider for Guidance Realty Homes. Simply go here to start the process of home ownership: GuidanceResidential.com/prequalify

 

Preapproval

A preapproval letter is much more involved.

It will only be issued after all the paperwork is received by the lender.  This includes so much more than income and assets, such as the sales contract, the title to the property and an appraisal, most of which are sought after a contract is submitted and accepted by the sellers.

Lenders issue a conditional commitment letter between the contract date and the closing date. This basically says that the lender intends to lend money to the borrower but is verifying information before issuing a full approval.