By Bruce Smith
This is the 1st article of a seven part series that should help the seller avoid the,” I Could Have…Should Have…Would Have…”moments.
What I am about to say sounds harsh but it has to be said. What you bought your house for five years doesn’t matter. Nor does it matter what your neighbor sold their house for 11 months ago. What you spent on home improvements doesn’t matter either. I should have…could have… would have… doesn’t matter had you sold your house at the peak in 2006. The pool you added or your wood floor upgrades are nice but be realistic. Every dollar you spent for any improvements and upgrades will not be matched dollar for dollar on resale.
Moving and selling a home can be one of the more stressful times in one’s life or marriage. Being realistic from the beginning will easy the selling process. There are many complex factors that impact the sale of your home. Every market and sub market has factors that contribute to your home’s value. Sub markets are often broken down by subdivision, neighborhood and street. It is important to understand your home’s value, your neighborhood, and your local real estate market. It is also import to understand what you may have control over and what you can’t control. You can’t control the dynamics of the local real estate market, your local economy nor the lending environment. Take comfort in the things you can control such as home curb appeal, cleanliness, maintenance, along with home availability for showing. Embraces what you can control with the pride of home ownership and realistically understand what factors you can’t control.
By Bruce Smith
The other day I got a question from a client I have just began to work with. She was feeling overwhelmed with the whole home buying process. She asked me a very good question. Should I get pre-qualified, or pre-approved for a loan or wait until I make an offer, or does it matter?
Yes it matters! Any buyer, in any market, especially this market needs to get pre-qualified. You want to be pre-qualified so you know the loan amount you can borrow for your purchase. What sense does it make for a buyer to spend time and energy looking at houses priced at $350,000 when they can only afford $165,000.
Pre-qualification is when your lender determines your “Debt to Income Ratio”, by evaluating your assets, income and debt information. This is the way your lender determines how much you may qualify for, can afford or how much they may be able to lend you. Your lender may or may not run a credit check when pre-qualifying you. Pre-qualification doesn’t offer a loan commitment but it is a fine first necessary step in the home buying process.
To be taken seriously as a buyer you need to become pre-approved. Your lender will begin the pre-approval process by taking a full mortgage application, pull credit checks; determine the loan amount and requirements. At this point, all the calculations of a full pre-qualification are done and you lender will review the file and address any concerns. The lender can now obtain tentative approval for the loan based on the borrower fulfilling certain conditions. These conditions may be verification of employment; income; asset; debt; letter of explanation concerning late payments, bankruptcy, and foreclosure. Pre-approval is the best and highest form of approval short of full approval on a specific property under contract.
The most important benefit of pre-approval is that the seller will take you seriously. That means a lot when you want to get your offer accepted. When my clients are selling their houses, they don’t take buyers seriously that are not pre-approved. I can’t imagine any other seller accepting anything less either.
In conclusion, pre-qualification is a good way to start off the buying process; however it is just one of the first necessary steps in the home buying process. Pre-approval is an absolute necessity if you are to be taken seriously as a home buyer and successful in your effort to purchase a home. Otherwise your home buying experience will be one filled with frustration, stress and disappointment when it could have been a fun opportunity!