[photopress:top_12_2007.jpg,thumb,alignright]Oliver Muoto from vFlyer Blog wasted no time contacting the women Sellisius recognized as the Top 12 Women Real Estate Bloggers for 2007. The podcasts are in nice easy to digest “bite size” pieces with great bits of information to chew on about real estate blogging. Oliver also includes a summary of advice from the interviews.
Yours truly is included and I am honored beyond words.
A preapproval is the next step after becoming prequalifed. Essentially, this means that you are supplying all of the documentation that is required to support your loan scenario. Everything you have told the Loan Originator needs to be backed up for a “full doc
There’s quite a difference between being prequalifed for a mortgage and preapproved. The letters that Loan Originators provide when requested for a prequal or preapproval may appear very similar. In fact, I’ve talked to borrowers on the phone who thought they were actually preapproved, when all they really had was a Good Faith Estimate from a lender. A Good Faith Estimate is just a rate and fee quote–an estimate is not a commitment to lend and does not indicate that someone has been prequalified.
Getting prequalifed is the stage just before becoming preapproved with a lender. It’s a good start. This is a great way to learn about a Loan Originator and to help you determine which Mortgage Professional you’re going to select to assist you with financing one of your largest investments. There’s no strings attached yet to the lender, you’re investing a little of your time and perhaps a few bones for a credit report.
The prequalification process help you determine:
Once a prequalification is complete, you or your Real Estate Agent can request a Prequalification Letter that may be used for presenting an offer on a home. A preapproval letter is stronger, however, a prequal can help buy you some time until a true preapproval is possible.
When a buyer is prequalifed, this should mean at the very least, the LO has obtained their income, assets (down payment and additional savings) and credit information. This can just be verbal—over the phone. The information that you have provided is not necessarily verified (if you have not provided your W2s, paystubs, asset accounts to your LO, you’re definitely not preapproved). If your information has not been ran through underwriting, you are not preapproved. It’s possible that you have provided your supporting documentation and that the LO has submitted your information to underwriting and you may still not be preapproved, or you may be “preapproved with conditions”.
Sometimes home buyers need a little elbow grease or significant documents are still required and you don’t want to disclose it on a preapproval letter. In this case, a prequal letter may better serve the client to buy them some time (if the listing agent will accept a prequal letter).
At the minimum, a prequal letter from a Loan Originator is simply confirming that an interview has taken place between a potential buyer and the LO. When I write a prequal letter, it will state something along the lines of:
“Dear Agent, This letter is to certify that based upon preliminary information, Ima Buyer has been prequalifed for conventional financing from Mortgage Master Service Corporation to purchase a home with a sales price of $375,000. A full approval is expected after receipt of the Purchase and Sale Agreement and other documentation.
This prequalification is based upon final verification of information supplied by borrower. A satisfactory property appraisal & clear title must also be furnished to the lender prior to closing this loan.
Someone interested in buying a home interviews a couple of Loan Originators and selects one to become preapproved with. The Loan Originator meets with the buyers and takes a complete loan application, reviews their credit and obtains all of their documentation. The LO provides the buyers with all of the possible mortgage scenarios and they select which program is best suited for their financial goals. The LO then submits that loan scenario to their processor and/or underwriter for loan approval. (With our current market, I am submitting all supporting documentation to the underwriter to sign off on before issuing a preapproval. Before August, I would review the findings with the borrower’s supporting documentation and a majority of the time, I would issue the preapproval letter without underwriter review. I’m not taking any chances).
The Buyers are very excited and write an offer on a home with a real estate agent that the LO has not worked with before. The real estate agent uses the LO’s preapproval letter when submitting the offer to the Listing Agent and Sellers. The offer is accepted.
A few days later, the Buyer emails the Loan Originator and says, “Gee thanks…we’ve decided to go with the real estate agent’s preferred loan officer
FHA insured mortgages have received a stigma in past years for creating a challenging transaction. Sellers seem to prefer conventional financing, even subprime financing, over an offer with an approved FHA buyer.
The Federal Housing Administration was established in the 1930s following the Great Depression. These innovative low down payment loans were intended to help more people become home owners with intentions of creating more stability in neighborhoods. FHA insured mortgages are woven into American history.
Here are some reasons you,as a Seller, should consider an offer with FHA financing.
Jillayne asks “How come I always get stuck with the Darth Vader topics?” (see comment 15).
Ummm….maybe you should remove your long black cape! 😉
You go, Girl!
On the Today show yesterday, Jim Cramer from Mad Money told Meredith Viera “Don’t you dare buy now…you will lose money”. This enraged Realtor Associations across the country who have blasted back that this is a “buyer’s market” and have demanded to NBC that Cramer correct his statements.
Cramer discusses slumping homes market
This morning on CNBC Squak on the Street, Cramer was asked if he would like to correct his statements on the Today Show…his only correction was that Seattle is still a good place to buy homes along with a small sector in…was okay to buy. Click here to watch his “Seattle correction” from CNBC this morning.
Over the past month, I’ve been combing through my database of my closed clients who have either adjustable rate or balloon mortgages. I’m sending each and every [photopress:july55ad.jpg,full,alignright]one of them a letter reminding them of the terms of their mortgage. Regardless of how much time I spend explaining how their mortgage program functions, as soon as someone has moved into their new home and they’re unpacking boxes—they’ve forgotten the fine details to the financing that made buying a home possible!
The letters restate what is disclosed on the Federal Truth in Lending and their Note, including what their margin and caps are. It also addresses when their first adjustment will take place and what the worse case rate and payment may be. Worse case payments are currently not disclosed on the Truth in Lending.
I began my mortgage career on April 1, 2000. So far, 20% of my closed transactions have been adjustable or balloon mortgages and 3% of my total closed business would be classified as “subprime
Finally there is a mortgage program available that are designed for when someone is buying a home for another family member. Previously, if someone wanted to buy a home to have their elderly parents live nearby, unless it could be classified a second or vacation home, the borrower would need to use non-owner occupied financing (much more expensive in rate and cost than owner occupied or second home financing).
In addition to helping out the folks, this new program, the Family Opportunity Mortgage, works for parents buying a home for their college student and parents who would like to help their disabled adult child buy a home.
Here’s the skinny:
Assisting a College Bound Student
Assisting an Elderly Parent
Assisting a Disabled Adult Child
It’s about time! 🙂
Aw come on and sing along with me (Benny and the Jets). Ben just surprised many by dropping both the Fed Funds and the Discount Rate by 0.50%. It’s too soon to tell how this may impact mortgage interest rates…however it (the Fed Funds rate) directly drops the rate home equity loans are based on to 7.75% (Prime Rate). You can see by the chart below that waiting on rate reductions from the FOMC to impact long term mortgage interest rates may not be the move for you to make.
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Chart compliments of Loan Tool Box
The Fed based this reduction due to ” the tightening of credit conditions has the potential to intensify the housing correction”. To read the entire press release, click here.