Why Get Pre-Qualified?
1. Pre-qualification acts as a dry run of the loan application process. The mortgage lender will use details you provide about your credit, income, assets and debts to arrive at an estimate of how much mortgage you can afford. The whole process may take only minutes or a few hours at most, and is free.
2. While a "pre-qual" is non-binding to the lender (because the information you provide has not been verified), it does serve as a good indication to potential sellers of your general creditworthiness.
3. These days most sellers will NOT accept an offer without at least a pre-approval letter, so if you are serious about buying this is the first step towards getting you in your new home.
7 Questions to Ask a Mortgage Lender to Make Sure You're Not Getting Screwed
7 Mortgage Questions to Ask a Lender
1. “What will the total housing payment be?”
It’s easy to focus on what your actual mortgage payment will be each month. But keep in mind that you’ll also have to pony up for things like property taxes, homeowner’s insurance, and HOA fees. If you put down less than 20 percent on the home, you may also have to pay mortgage insurance premiums, which protect the lender against the risk that you’ll default on the loan. These all add up.
“Know the full amount you’ll need to pay each month to ensure the home will be affordable and not get in the way of your other expenses and savings goals,” says Robertson.
2. “What’s my rate and how long is it good for?”
Snagging a low interest mortgage rate helps reduce your monthly payment, giving you a little extra wiggle room in your budget. That means shopping around for lenders – and negotiating.
But Robertson says you should also ask how long the rate is good for (the lock period) and ensure it’s actually locked once you’re happy with the quote you receive. That way it won’t change, even if rates rise in the meantime.
3. “Do you charge any lender fees or points?”
Expect to pay a host of charges when you take out a mortgage, including title fees, loan processing fees, underwriting fees, and loan origination feesSome of these can be whittled down with a little negotiation. The loan origination fee, for example, is usually a percentage of the home sale price. For more expensive homes, the lender may be willing to take a smaller slice of the pie, knowing that they’ll still make a respectable profit.
By law, the lender has to provide the “APR,” a version of the interest rate that includes some or all of these fees. Be sure to ask what’s included in their figure. That way, you can compare the APR for different loan options, accounting for any fees that are not rolled into it.
Also check to see whether the lender is charging you any prepaid interest, also known as “points.” Each point is equal to one percent of the home price. So paying two points on a $300,000 home means you have to fork over $6,000 at closing. Paying points will typically lower your interest rate, which is one reason it may look like you’re getting a great deal. Unless you take them into consideration, you’re not really doing an apples-to-apples comparison of different lenders.
Keep in mind that if you plan to stay in the home a long time, paying finance charges on the front-end may not be a bad idea. Otherwise, it’s probably better to steer clear.
4. “What type of mortgage is best for me?”
While most lenders will assume you want a 30-year fixed, a good one should take the time to go over a number of different loan options.
“It might turn out that a cheaper 5-year ARM is a better alternative if you don’t plan on keeping the home for very long, or if you expect to refinance in the near future once your financial situation improves,” says Robertson. “Or that a 15-year fixed is totally manageable and a better value for you as a homeowner.”
The bottom line: there’s no one-size-fits-all solution to mortgages. Tell the lender about your plans and have them give you the pros and cons of different products.
5. “How much do I need to put down?”
A good lender will be able to provide with a variety of down payment options, depending on how much cash you have to put down. Before picking a mortgage, ask exactly how much you’ll need to pay upfront, including closing costs like appraisal and title fees, property taxes and points, if there are any.
Are you required to pay mortgage insurance based on your low down payment? If so, make sure you know how much that will tack on to your monthly bill – and potentially your closing costs, too.
6. “Why do mortgages get declined?”
The lender offers you a great rate with a down payment you can actually afford. Everything’s looking great. The last thing you want is to find out that the bank or mortgage company decided to back away from your loan at the last minute. And yet it happens.
Robertson recommends asking why other loans tend to fail in order to avoid the same misfortune. “They might tell you because of credit, or a new job, or a lack of seasoned assets,” he says. “Knowing why mortgages don’t make it to the finish line could be key to getting yours to the funding table.”
7. “How long will the process take?”
When it comes to home buying, timing is of the essence. You’ll want to ensure that the lender you choose can not only close your loan, but do so by the closing date specified in the purchase agreement.
That might mean seeking out a mortgage originator with a record of efficiency. “Some lenders specialize in refinances, and may not be the best fit for a time-sensitive home purchase,” says Robertson.
As with any huge purchase, you definitely want to shop around. Bounce your list of questions off multiple lenders so you can figure out who’s going to give you the best overall value, not just the lowest advertised rate. Considering how much money and heartache you could be saving, you’ll be glad you did a little homework going into the process.
My clients have been very happy with my lender referrals. When you need a referral for a mortgage lender to get the breakdown of the cost and process involved in buying a home. DON'T WAIT!....LET ME KNOW.
"It is always good for you to know your numbers and easy for me to find you the right home at the right price"
Here is a little scenario EXTRA EXTRA READ ALL ABOUT IT!
Problem: Clients come to us all the time asking us why their collection is still showing a balance on their credit report despite the fact they paid it some time ago.
Answer: Think about it, because it’s a nice little conspiracy, once the creditors have received the money they have been relentlessly hounding the customer on what incentive do they possibly have to report their new found wealth to the bureaus...none. Sure they will make the correction in their internal system but why go the extra mile to the bureaus. Now granted this is in violation of the Truth and Lending Act but at the end of the day, rarely is this enforced.
Interestingly, first action will not be just to correct the balance as this could potentially lower the client’s score, but rather aggressively seek a permanent deletion of the account as it's clearly going against the Fair Credit Reporting Act.
Now, I’m sure after reading this inspirational blurb you can’t wait to get in touch with me - PREETI KROLL - 704.891.3788 @ 360degreerealty.com
Advantages of a Pre-Approved Mortgage
Visit a mortgage company before talking to a real estate agent.
2 Minute Read
When preparing to buy a house, most people start with a real estate agent. That seems to be the correct first step — after all, it's a house you want to buy — but it's not. A house may be something you want, but you're not going to get it without a mortgage. Therefore, you should talk first with a lender, not a real estate broker, and see about getting a pre-approved mortgage.
Most banks offer loans, and going to them is like shopping at a Ford dealer: You won't get a Chevy, no matter how good the Chevy might be. Therefore, you need to compare offers from several banks.
Or you can work with a mortgage broker. Brokers represent dozens of banks. Although the broker serves as middleman, his or her services will not cost you anything extra. That's because brokers get loans at wholesale rates, and pass them along to their clients at retail prices, just like any business.
The difference between wholesale and retail is how brokers make money. Therefore, you get the same rate from a broker as if you went directly to the lender yourself. In fact, because of their volume, many brokers are able to offer their clients better deals than you can get by talking to banks on your own.
The choice is yours.
But why bother looking for a house if you don't know whether you can get a mortgage, or how much of a loan you can get? After all, your mortgage will determine how expensive a house you can buy. Many real estate agents, in fact, will not work with a client until after they've been approved by a lender.
With that being said, here are three advantages of a pre-approved mortgage.
You Avoid Disappointment
There's nothing worse than finding the home of your dreams, only to discover later that you can't afford it. By going to the lender first, you'll determine how much house you can buy before you start visiting homes beyond your price range.
You Save Significant Amounts of Time
While you're searching for a home, the mortgage application process can be underway. Too often, people start this process only after they spend three months finding the home they want. This forces them to spend another three months waiting for their loan's approval. Starting the loan process now will save you a lot of time.
A Pre-Approved Mortgage Can Be a Major Negotiating Weapon
With a pre-approval letter in hand, you can complete the purchase of a home in as little as 30 days, instead of the usual three months. Many sellers are in a hurry to sell and will accept a lower offer in exchange for a quicker settlement. If two people bid on the same house, the person with a pre-approved mortgage will win the contract.
So choose your mortgage company first, get the pre-approved mortgage, and then hire a real estate agent.