Category Archives: Buying

Buying Secret: Get Pre-Approved for Your Home Loan

There’s a big difference between a buyer being pre-qualified and a buyer who has a pre-approved mortgage. Anybody can get pre-qualified for a loan. Getting pre-approved means a lender has looked at all of your financial information and they’ve let you know how much you can afford and how much they will lend you. Being pre-approved will save you a lot of time and energy so you are not running around looking at houses you can’t afford. It also gives you the opportunity to shop around for the best deal and the best interest rates. Do your research: Learn about junk fees, processing fees or points and make sure there aren’t any hidden costs in the loan.

Millions of Consumers Getting a Credit Score Boost

An overhaul in how several major credit reporting agencies factor in negative credit information is prompting millions of consumers’ credit scores to rise. Collection events were struck from 8 million consumers’ credit reports in the 12 months ending in June. The New York Federal Reserve reported Tuesday that consumers who had at least one collections account removed from their credit reports are seeing an 11-point increase to their scores.

Critics have long claimed such dings to scores are prone to errors or that they’ve unfairly kept many out of the borrowing market. Equifax, Experian PLC, and TransUnion have all agreed to revamp reports, which stems from a 2015 settlement with state attorneys general on the matter. In the settlement, the firms agreed to remove some non-loan related items that were sent to collection firms, such as gym memberships, library fines, and traffic tickets. They also agreed to strike medical-debt collections that have been paid by a patient’s insurance company.

The majority of consumers who benefited from the recent changes are those who had credit scores below 660 before the collection events were removed, according to the New York Fed.

This could be good news for potential home buyers, as better credit scores are a big factor lenders use in granting cheaper rates for mortgages. And relatively small shifts in scores can make a big difference on loan affordability. A recent study from LendingTree showed that consumers who can raise their credit scores from “fair” (580-669) to “very good” (740-799) could potentially save $29,106 in mortgage costs.

Source: “Overhaul Boosts Credit Scores of Millions of U.S. Consumers,” The Wall Street Journal (Aug. 15, 2018)

5 THINGS YOU MUST DO BEFORE BUYING A HOME

1. IMPROVE YOUR CREDIT SCORE
A high credit score snags you the best deals. Below 660 or 680, you’re either going to have to pay sizable fees or a high down payment. 700-720 will get you a good deal and 750 and above will garner the best rates.
2. FIGURE OUT WHAT YOU CAN AFFORD
FHA loan – Your monthly payment can’t exceed 31% of your monthly income. Conventional home loan monthly payment should not exceed 28% of monthly income.
3. SAVE FOR DOWN PAYMENT, CLOSING COSTS
You’ll need to save between 3%-20% of the house price for a down payment.
4. BUILD A HEALTHY SAVINGS ACCOUNT
Your lender wants to know that you’re not living paycheck to paycheck.
5. GET PREAPPROVED FOR A MORTGAGE
This is the #1 thing you should have in order. How do you know what you can afford if you aren’t preapproved?

Article Source: bankrate.com

How to Prepare to Buy a Home

How to Prepare to Buy a Home

Talk to mortgage brokers. Many first-time home buyers don’t take the time to get pre-approved. It is important to take the time to shop around to find the best mortgage for your particular situation. It’s important to ask plenty of questions and make sure you understand the home loan process completely.   There is a difference between pre-qualification and pre-approval.   The difference may seem nominal, however when you put an offer on a home there is a vast difference.   Pre-qualification is the process of completing an application with a lender. Based on the information you provide the lender will give you an amount for which you should qualify.  Pre-approval consists of providing your lender with all the required documents needed to verify your income and expenses.   After the lender has processed all your documentation, they will provide you with a pre-approved mortgage amount.

 Be ready to move. This is especially true in markets with a low inventory of homes for sale. It’s very common for home buyers to miss out on the first home they wish to purchase because they don’t act quickly enough. By the time they’ve made their decision, they may find that someone else has already purchased the house.

 Find a trusted partner. It’s absolutely vital that you find a real estate professional who understands your goals and who is ready and able to guide you through the home buying process.

 Make a good offer. Remember that your offer is very unlikely to be the only one on the table. Do what you can to ensure it’s appealing to a seller.

 Factor maintenance and repair costs into your buying budget. Even brand-new homes will require some work. Don’t leave yourself short and let your home deteriorate.

Think ahead. It’s easy to get wrapped up in your present needs, but you should also think about reselling the home before you buy. The average first-time buyer expects to stay in a home for around 10 years, according to the National Association of REALTORS®’ 2013 Profile of Home Buyers and Sellers.

Develop your home/neighborhood wish list. Prioritize these items from most important to least.

Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account nearby schools, recreational facilities, area expansion plans, and safety.