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Is a Mortgage Pre-Approval Necessary?
Is a Mortgage Pre-Approval Necessary? 1024 536 nathanburch
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Do you need a mortgage pre-approval letter to make an offer on a house? You know you need to get your ducks in a row before looking at homes, but does that include securing a pre-approval letter from a lender?

The truth is, getting pre-approved can actually improve your chances of falling into the sellers’ good graces, so you want to get it done as soon as possible in the home-buying process.

So how organized do your financials need to be before you start looking? Let’s take a look, starting with clarifying what a pre-approval letter actually is.

What is a pre-approval letter?

Mortgage pre-approval is assurance from a lender to provide you with financing to buy a home up to a certain loan amount. It’s a letter from your lender, written on the lender’s letterhead, stating that you are approved for a loan of a specific dollar amount.

To get approved, your lender will collect paperwork from you that will include pay stubs, federal tax returns, W2s, investment accounts, and residential history. Once your complete financial story is analyzed, the lender will decide whether or not to issue you a pre-approval letter.

Do you need a pre-approval letter to see a house?

Real estate agents prefer showing homes to buyers with a pre-approval letter, because it shows the buyer is financially capable of purchasing. Agents want to know if you can really buy a home, a pre-approval letter isn’t mandatory to tour a home.

All agents are allowed to show you homes, even if you do not have a pre-approval letter. It just might not be in their best interest, so don’t be surprised if you get some push-back if you say you don’t have pre-approval.

How a pre-approval letter benefits you.

If you don’t take the time to get pre-approval, it’s not just the real estate agent’s time you’re wasting—it’s possibly yours as well. There is no sense in wasting your own time and that of an agent to see homes until you are ready to purchase.

Getting a pre-approval letter should be one of your first steps in the home-buying process. Then when you see something you like, you can act on it. As a buyer, that ability to act quickly gives you an edge over people who don’t have certification from a mortgage lender.

How to get a pre-approval letter.

Serious about getting serious? Here’s how to get started. 

  • Fill out an application. This can be done in person, online or over the phone.
  • The lender runs a credit check to get your FICO score.
  • It also determines your expenses and income by looking at your financial portfolio.
  • They then determines if you qualify for a loan, and if so, what kind and for how much.
  • Finally, the lender puts this in writing as the pre-approval letter.
Things to Remember
Things to Remember 1024 536 nathanburch

 

The are many factors that can change your ability to qualify for a mortgage. It’s important to follow these guidelines until your loan is closed.

Do

  • Pay all your monthly bills on time
  • Keep track of all your bank deposits and statements
  • Find and organize documents such as W-2s, tax returns and other statements related to investments and/or other finances
  • Get pre-approved before you start looking for your new home
  • Leverage our easy to Mortgage Application platform, Elevate to make the entire process easy and contact us with any and all questions

Don’t

  • Apply for new credit cards, loans or purchase offers
  • Deposit or withdraw large amounts of cash without speaking to your Loan Officer
  • Change jobs, your pay structure or employment status
  • Charge current credit accounts/cards to the maximum
  • Make large purchases such as cars, appliances or furniture
  • Take debt consolidation action or pay off collections or charge-offs

Any changes to your current financials could affect your current financial picture. We are always here to provide guidance and advice as you begin your home buying journey.

Verified by Vellum, Your Client’s First Step
Verified by Vellum, Your Client’s First Step 1024 536 nathanburch

A fully underwritten Verified Pre-Approval by Vellum streamlines the homebuying process and allows your clients to shop with confidence. We are excited to share in the homebuying experience.

  • Gain Confidence & Feel Secure

    Be able to submit an offer with confidence knowing it provides proof of the ability to obtain financing.

  • Enjoy a Faster Closing Period

    Close in as few as 8 days. A quick closing can sometimes be the difference in your clients offer being selected.

  • Save Your Clients Money

    Strengthen the buyers ability to negotiate. With no concerns about a clients ability to purchase the home, your clients offer will stand out amongst the others.

  • Experience Matters

    With a deep understanding of local real estate and mortgage options we provide the best custom solutions for your clients specific financial story.

Get Your Clients Started Out on the Right Foot with a Verified Pre-Approval

101% Financing, No Mortgage Insurance
101% Financing, No Mortgage Insurance 1024 536 nathanburch
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101% Yours.

Owning a home is the American Dream! Whether you are a first-time buyer or moving up, we’ve made it easier than ever to get into a new home…even helping with closing costs.

We are able to finance 101% of your sales price, meaning you could potentially have no down payment and an extra one percent of the sales price towards your closing costs. All of that and no mortgage insurance.

  • No Mortgage Insurance
  • Credit score as low as 660
  • Financing up to $726,525
  • DO NOT have to be a first-time homebuyer
  • Max 1% contribution (closing costs)
  • Possible financing options up to 105%
Contact us for more information and make your new home 101% Yours!

 

Income limits are specific to the area you are looking to purchase. Must be your primary residence. Program not available in all states. Not all applicants will qualify. 4% of the lessor of the purchase price or appraisal with no dollar cap for down payment and closing cost assistance. Second interest only rate matches the first mortgage rate. Maximum 105% LTV with a 3rd DPA. Terms and conditions apply and requirements can change at any time. This is not a commitment to lend.

Home Equity: What It Is and Why It Matters
Home Equity: What It Is and Why It Matters 150 150 nathanburch
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It is often said that homeownership builds wealth. So, what is home equity, and how can it enhance your net worth?

What is home equity?

Home equity is the current market value of your home, minus what you owe. You’re looking for a positive number. Any gain comes from:

  • Paying down the principal balance on your loan.
  • An increase in market value over time.

How does home equity work?

Building home equity is a bit like investing in a long-term instrument, like bonds. There are some ways to tap it, but wealth is created over years as your share of “free and clear” ownership of the house increases.

As a rule, building home equity is a slow climb, at best. U.S. residential year-over-year home price appreciation averaged 1.89% from 1997 to 2017, adjusted for inflation, according to CoreLogic, the Bureau of Labor Statistics, and the Urban Institute.

However, behind that average are some major year-over-year price swings during the same period, ranging from a gain of 12.6% to a drop of 18.1%, according to the Urban Institute.

When it comes to short-term home appreciation, sometimes it’s more of a bungee jump than a climb.

Why is home equity important?

Home equity can be a long-term strategy for building wealth. Mortgage payments reduce what you owe while your home gains value, so paying on a house has been called “a forced savings account.”

Home equity can be a long-term strategy for building wealth.

This is unlike virtually every other asset purchased with a loan, such as vehicles, which lose value while you pay them off.

A growing number of U.S. homeowners are amassing “impressive stockpiles” of home equity wealth, according to Daren Blomquist, senior vice president at Attom Data Solutions. At the end of the second quarter of 2017, over 14 million U.S. properties were considered “equity rich” — meaning the debt on the property was 50% or less of the home’s current market value. That’s about 24% of all owner-occupied homes with a mortgage.

Building home equity is definitely a long-term proposition. Blomquist says wise words from one of his relatives may state it best. “My wife’s great-grandfather — who bought property in Southern California a long time ago — his advice was, ‘You take care of a piece of real estate for 20 years, it’ll take care of you forever.’”

Source: Nerd Wallet

How a 20-year home mortgage can save you money
How a 20-year home mortgage can save you money 1024 536 nathanburch
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The 30-year fixed-rate home mortgage dominates the housing market, particularly for first-time buyers who appreciate the ability to extend their home loan payments for the longest possible term.

The second most common fixed-rate loan term is 15 years, but many lenders also offer loan terms of 10 or 20 years. Sometimes lenders even offer a personalized term chosen by the borrower.

On average, a person will save a significant amount of interest when either purchasing or refinancing into a 20-year mortgage compared to a 30-year. Here are four reasons to consider a 20-year mortgage:

  • Save on interest:
    The most obvious reason is that the interest rate of a 20-year mortgage is typically one-fourth of one point to three-eighths of one point lower than a 30-year fixed mortgage. This means, on an average, a person will save a significant amount of interest when either purchasing or refinancing into a 20-year mortgage compared to a 30-year. Because of a shorter loan term and a lower interest rate, on a $280,000 loan amount, a borrower can save approximately $85,000 in interest over the life of the loan.
  • Pay off the loan faster:
    When a borrower is refinancing to get a lower interest rate, instead of taking their original 30-year mortgage and refinancing it into another 30-year mortgage, they’re able to take their original 30-year mortgage and refinance into a 20-year mortgage, which would potentially keep them on their payoff goal. Thus, they don’t have to start all over with a new 30-year mortgage.
  • Match the payoff to retirement goals:
    Let’s say a borrower is in their late 30s or 40s and their retirement plan is to retire in their 60s. Applying for a 30-year mortgage would push their potential payoff of their house into their 70s. Choosing a 20-year mortgage would keep them potentially on track for having their house paid off in their 60s.
  • Affordable payments:
    A 20-year mortgage is a good alternative to a 15-year mortgage, as many home buyers can’t stretch their budget to make the higher payments required to pay off a mortgage in 15 years, but yet they want to pay off the home faster. The borrower is still paying off the loan in 10 years less than a 30-year mortgage, and if the borrower ever wanted to, they have the ability to make extra payments.

Speaking with a Vellum mortgage professional will ensure that you obtain the mortgage that’s right for your story.

Source: Washington Post