Aug 19 2010

Getting Preapproved for a Mortgage

Getting Preapproved

Getting preapproved for a mortgage can help you buy a home you can afford.

By Marcie Geffner – LendingTree.com

January 23, 2009

If you’re getting ready to buy a home, you probably already know that lower home prices and interest rates have made homes much more affordable. But did you also know that getting preapproved for a mortgage can help you shop for and find a home that’s right for you? Here’s why:

Find out how much you can afford to spend

It’s no secret that lenders have tightened their standards or that loan qualifications now tend to be stricter than they were a few years ago. Lenders today will want to review your income, debts and credit score, and they’ll expect documentation that shows your income and assets.

By getting preapproved for a loan, you’ll be able to find out whether you’ll be able to qualify and how much you’ll be able to borrow. Since you’ll know how much you can afford to spend before you start shopping for a home, you won’t get your heart set on a home that’s too pricey or miss out on a home you thought you couldn’t afford. Instead, you’ll be able to limit your search to homes that meet your needs and budget. By getting preapproved, you’ll also get a good-faith estimate of your closing costs, so you won’t be surprised by those expenses later on.

Find out your interest rate and monthly payment

Getting preapproved for a loan will also introduce you to the loan application and approval process. You’ll find out the types of loans, interest rates and monthly payments that may be offered to you, depending on your income, credit score and other aspects of your personal situation. And when you find a home you want to buy, you’ll be ready to make an offer without delay. A preapproval letter from a lender will help make a good impression on home sellers. Home sellers will know that you’re serious about buying a home and that you won’t have to struggle to get financing. That might even improve the odds that the seller will accept your offer.

How to get prequalified and preapproved

To get “prequalified” for a home loan, you’ll need to answer some basic questions about your financial situation. After that, the lender will review your paycheck stubs, bank statements and other documents, and then you’ll be “preapproved” for your loan. Be aware that prequalified and preapproved are preliminary; your loan will still need to receive final approval before you can buy your new home.

via Preapproved Mortgage – Getting Preapproved for Mortgage. Continue reading


Aug 14 2010

How to Qualify for a Home Loan | eHow.com

Before you start seriously looking at homes, it’s a good idea to put a plan in place to qualify for a home loan. It may not be realistic to qualify for a loan big enough to purchase your dream home, but there are things you can do to improve your odds of qualifying for a reasonable loan based on your family’s income.

  1. Set a reasonable goal. Work with your real estate agent to come up with a maximum monthly amount you can devote to a loan, taxes, insurance and maintenance. Your lender can also help you determine the maximum loan amount you would currently qualify for.
  2. Make your financial situation clear to the lender. Explain any pending improvements to your financial situation, such as a raise or new source of income.
  3. Develop a plan to save money for a down payment. Find a source of additional income, such as a second job or find a way to cut back on other expenses. Then, calculate how much money you can save each month and how long it will take you to save enough for the down payment. Plan to apply for a home loan after you have saved enough for the down payment.
  4. Eliminate debt. Pay down credit cards, sell a car or trade down to a cheaper car. If you cannot eliminate debt, consolidate your debt to get your monthly payment down. Not only will eliminating debt give you more money to spend each month, it improves your credit rating.
  5. Talk to your real estate agent about alternative funding options to consider. If you are a veteran, you may qualify for a Veteran’s Administration loan without a down payment. You may also qualify for a balloon mortgage, which has low monthly payments for an initial period.
  6. Look for a home for sale with an assumable mortgage with a desirable interest rate. With an assumable mortgage, you’ll take over the payments and interest rate and pay the difference between the selling price and the remaining amount owed on the loan. You will still have to qualify for this type of loan, but a good interest rate could give you a better chance of qualifying.
  7. Start out with a less expensive home. Find a home in need of remodeling or a smaller home than your ideal home. While living in this home, you can save money and prepare to trade up to the home you really want. Buying or selling a home will give you a credit boost to help you qualify for a larger loan.

Tips & Warnings Lenders suggest you spend no more than 28 percent of your monthly income on a mortgage payment. Improve your chances of qualifying for a home loan by having a friend or family member co-sign for the loan. via How to Qualify for a Home Loan | eHow.com.

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Aug 5 2010

Top 10 Home Buying Mistakes That Can Cost You : HGTV FrontDoor Real Estate

The logo used from December 1, 1994 to March 1...

Avoid these blunders that homebuyers commonly make

By Shannon Petrie, FrontDoor.com

Pre-approval lets you know how much you can afford before you start shopping for a home.

Mistake #10: Not getting pre-approved before house hunting

Why get your hopes up looking at $500,000 homes, when you can really only afford a $300,000 home? Before you start house hunting, narrow down your price range by getting pre-approved. Shop for a lender or mortgage broker you can trust. The mortgage pro will review your credit, income, assets and debts, and recommend a mortgage with monthly payments that fit your budget. The result is a good faith estimate, a document that spells out the likely terms of your loan, including the interest rate and closing costs. Not only does this let you know how much house you can afford, it also lets sellers know that you’re serious about buying.

via Top 10 Home Buying Mistakes That Can Cost You : HGTV FrontDoor Real Estate.

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Aug 3 2010

Associations Can No Longer Ignore FHA Approval

By Christopher L. Gardner, J.D. Print Article

July 16, 2010

The screaming and cursing you hear in unit 404 isn’t coming from Mr. Armbrister’s television—Armbrister has just learned that another potential sale of his condominium unit fell through due to the buyer’s inability to obtain financing. In this case, the buyer wanted to purchase Armbrister’s condo unit with an FHA loan—Armbrister’s homeowners association, however, had neglected to obtain FHA approval.

FHA loans, which are mortgages insured by the Federal Housing Administration, accounted for a mere 1.7% of new mortgages as recently as 2006. Today, almost half of all new mortgages are FHA—yet there are still many misconceptions associated with their use and their benefits.

Due to the elimination of ‘spot approval’ in February 2010, an entire condominium development must now apply to the Department of Housing and Urban Development (HUD) and be granted FHA approval before someone can purchase or refinance a unit using an FHA loan. Before its elimination, spot approval allowed an FHA buyer or refinancer to conduct a transaction in a specific condominium unit located in an unapproved complex.

Management companies and homeowners associations constantly ask why their condominium developments should seek FHA approval. A recent survey of more than 12,000 home buyers conducted by the Home Buying Institute indicated that the vast majority of respondents (87%) planned to use an FHA loan for their purchase. Given the prevalence of FHA loans in today’s housing market, the simple answer is that unit sellers in an association without FHA approval are severely limiting the pool of potential buyers. Thanks to the law of supply and demand, fewer possible buyers mean units will often sit on the market for longer periods and sell for lower prices. Even non-sellers are affected as lower sales prices for neighboring units often result in lower appraised values for all units.

Why have we seen such a surge in FHA borrowing? First, the general unwillingness of today’s lenders to extend credit and an almost complete withdrawal of private capital from the home mortgage sector forced HUD and FHA to take action. They ultimately crafted policies to increase FHA availability in order to help stabilize the housing market. FHA loans encourage lenders to lend, assuring them that they will be paid back by the federal government in case of default.

Second, as many residential real estate agents know all too well, the sudden and inevitable collapse of the high-risk subprime mortgage industry left a tremendous void in the marketplace for those buyers that did not have the 20% downpayment typically required when obtaining a conventional loan. This void is nicely filled by FHA loans, which require as low as a 3.5% down payment.

Finally, the significant increase in the maximum FHA loan limits from $362,790 to $793,750, means that an FHA loan is now relevant and appropriate for a much greater percentage of home purchases and refinances than ever before.

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Aug 3 2010

Top Seven Reasons Banks are Denying Home Loan Requests

August 2, 2010

The lending landscape has changed quite drastically over the past several years. Practices, approvals and standards that were once widely accepted have either vanished or transformed beyond the point of recognition. Many banks, which were once extremely careless with their loan underwriting techniques and approvals, have dug themselves into a significant hole that will take many years to climb out of. Promotions such as “100% Financing” and “No Doc Loans” were both major contributors to the financial crisis banks and consumers are facing today.Today, banks are making sure they don’t make the same mistakes again, so loan underwriting standards have become more stringent than ever before.According to a recent Federal Reserve survey, it was found that about 75% of the banks surveyed indicated they had tightened their lending standards for prime, subprime and commercial mortgages. That was up from about 60% in the previous survey. With this sharp increase in lending standards, borrowers are being turned down for real estate loans at an alarming rate.

via Top Seven Reasons Banks are Denying Home Loan Requests | RISMedia.

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Aug 3 2010

5 Smart Reasons to Buy a Home Now

August 2, 2010

The economy is stabilizing and home prices are holding. It’s not just as good a time as ever to buy a house—it’s one of the best times ever.

  1. Low mortgage rates serve as an equity shock absorber. When buyers borrow at today’s record-low rates, they start building equity as soon as they close. That means they have a little give to absorb a few ups and downs as the still-recovering housing market gains traction.
  2. Houses are in move-in condition. Homeowners have continued to spend on maintenance and repair, according to the Harvard Joint Center on Housing. Homeowners who have been holding back, kept their houses in good shape while they waited. As those houses enter the market, they are in marked contrast to tattered foreclosures.
  3. Terrific houses are coming on the market. Foreclosures are finally starting to clear the system—and this is just the opportunity that owners of many desirable properties have been waiting for.
  4. Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines, giving appraisers more flexibility to set values that reflect the current market. This ensures that today’s deals will make it over the finish line.
  5. Plenty of programs. Homes are more affordable than they have been for years, but communities have stuck by “workforce housing” programs that encourage middle-class families to buy houses. Buyers who qualify can get a big boost by combining one of these programs with today’s low mortgage rates.

via 5 Smart Reasons to Buy a Home Now | RISMedia.

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May 28 2010

Preparing for Homeownership

Before you begin your home search at REALTOR.com, prepare yourself by reading Ten Steps to Homeownership.

Even before you begin looking for a home, the homebuying process requires diligent preparation. Buyers who have been preapproved for a home loan often have their offers taken more seriously by sellers. With advance preparation, you can tackle the process of acquiring the financing you need with more confidence. To help you on the path to homeownership, NeighborWorks® offers* step-by-step guides, developed by the Fannie Mae Foundation, that can help you get closer to achieving your dream:

via Preparing for Homeownership.

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