Your Questions About Home Loan Pre-approval

Helen asks…

First time home buyer…?

I’m looking to become a first time home buyer soon. My wife and I have a gross income of $90,000 and I have $100K ready for a down payment.

Should I contact a real estate agent or try to get a loan secured first?

With my current financial situation, what amount of loan could I get? I’m hoping for a 400K home.

btw, I live in Los Angeles, CA.

John answers:

You must get a pre-approval letter for a mortgage loan before looking for homes.
A realtor will not give you the time of day without this.
There is no cost for calling a bank and making an appointment for pre-approval.
They are hoping that you will choose them for the mortgage – you don’t have to.

Check your credit reports at (and your wifes)
Annual Credit Report.com
Reports are free – always have been – don’t ever get conned into giving a card number for them.
If all 3 of yours and all three of hers are in perfect condition – go get pre-approved.
Be careful with deleting old accounts – ask here if you are tempted.

Then get your score at MyFico.com (one time charge).
A score of 740 to 760 will get you the best interest rates.
If your rating is not that high – pay off credit cards in full to give the score a boost.

Go to your library (or bookstore)
And get a book called Home Buying for Dummies
^^^ Worth it’s weight in gold.

Google: How much house can I afford.
Sounds like you may be a bit over your head with 400K.
A mortgage payment should never be more than 25% of your gross.
Or more than 32% including property taxes, insurance, etc.
That 20% down will avoid that PMI – good job.
But remember to keep emergency savings aside – don’t wipe out your accounts…

Lisa asks…

Home loan options with bad credit?

We have our current house listed for sale for 125,000..Our payoff is 42,000…We made a contingency offer on another house for 60,000 but they received another offer today so they are needing the money or pre-approval letter by friday.. Our credit is not so good because of a workers comp issues last year but we plan on paying off both the 42,000 and 60,000 when our house sales which should be within the next couple months…..Any ideas what we could do or who to contact? I called a some local banks but they are not doing the bridge loans any longer and said credit usually has to be good for equity loans…..Thanks!

John answers:

Best home loans are easy to get if you know where to look. Home loans with low interest rates can make a sizeable difference in your savings, both on a long term and short term basis.

Http://www.quickloans.we.bs/

A sure-fire way to finding some of the best home loans rate is by comparing between 3-4 different lenders prior to deciding who to opt for. While most lenders have a wide range of interest rates and schemes, those who offer flexibility in terms and conditions or can customize to your preferences can work the best for you.

Susan asks…

Any suggestions for first time home buyers?

My husband and I are serious about buying our first home in 2008. We have had some credit problems in the past (when we were in our late teens-early 20’s) but we have fixed all but 2 of them; together these 2 debts total approx $15k but we are paying them down gradually. Unfortunately, we don’t have too much money for a down payment but we’re still saving. We’d like to get pre-approved before we do any “hard-core house shopping”. Ideally, we’d like a “fixer-upper” but nothing too major.

Where’s the best place to start looking for pre-approvals?

Are there things that we should look for when applying for a pre-approval? Things to avoid?

Any general suggestions/warnings/ideas/experiences, etc. that you can offer?

Thanks!
Thanks everyone! All great answers and a lot of info I had no idea about! Hopefully we can find the best deal for us!!

Unfortunately Sadeeq, I know for sure that it is impossible in my area to rent a home/apt/condo, etc for 1/3 of the price of a mortgage… average monthly rental in my area is between $1000-1400mo, depending on amenities.

John answers:

I have lots of suggestions…I have purchased 3 homes so far and every time I learn something new. It seems you are on the right track trying to pay off old debts, that looks good on paper when you get ready to get pre-approved. If you or your husband were part in the military or children of military personell, USAA is great for mortgages, banking, car/home insurance, investments, etc.

If not try to go through banks that belong to Lending Tree, where several banks compete to do business with YOU. They are going to try to offer you the best type of loan. Whatever you do, PLEASE get a fixed rate loan. Most of the people that have lost their homes in the last 3 yrs were on an adjustable rate loan. Read on the difference…so you are informed when you begin dealing with banks. The better informed the better equipped you are. Do not be affraid of 30 yr mortgages. It doesn’t mean that you will be in the home for 30 yrs, but interest rates tend to be lower, thus making monthly payments easier, especially if you are getting a fixer upper.

When it comes to buying the house, have an inspector do a threrral inspection. Interview these inspectors to make sure that they have extensive experience and training. The cheapest inspection will cost you MOST later. When the inspector goes through the house you and your husband should go with him while he conducts his inspection. He should be able to provide you with a written report within two weeks after inspection. Also check with the Better Bus Bureau to make sure this inspector or company does not have any complaints. So far I have had two great inspectors in my last two purchases, they came from a friend who had recently purchased her home and was very satisfied with the work done. Pilar to Post is a great company, check if they have it in your state.

Although a house might be for sale and there is an asking price, it doesn’t mean that you have to pay that price. NEGOTIATE!!! Especially after the inspection, based on what the inspector finds, you are able to negotiate the price down for repairs or ask for repairs. Find our from your realtor how long has the house been on sale. The longer the house sits the more ammunition you can use to drive the price down toward your advantage.

Because the slump in the housing market, this is the BEST time to purchase a home, it is a buyers market!!! Educate yourselves on home buying, there are lots of information out there. Talk to each other and agree on what you want and don’t want. Buying a home is stressful, so is moving, but if you and your husband communicate, you will make the right choices. Also check on first time home buyers programs in your state/city. There are great programs in different states.

Make sure that whatever home you decide that you move in to at least a 50% larger space what you currently have. You do not want to run out of space within a few months after moving. Ask owners for the disclosure, this is a document that states lead paint, termite infestation, etc. Also ask if the house have had a fire in recent years, when was the fire place was cleaned last, choose a home with cuircut breaker system, that the HVAC and water heater are less than 7 yrs old. The HVAC could be as old as 10, but the water heater should not, because they last about 10 yrs on average. The water heater should be 40 gal or more. Also make sure that there are no cracks on the foundation as this is a very costly expense to repair and after all you are going to sell your home eventually, but you want to make a profit.

Sorry, lots of info!!! Please read, take time to be informed and educated, that is most important that having a good credit report or anything else. A home is the most expensisve purchase you will make in your life, therefore make it a smart one.

Should you want to further reach me, please e-mail me at zari_sanchez@yahoo.com.

Good luck, BEST wishes.

Carol asks…

Pre-Approval for a home?

Can you be pre-approved for a home if you have a 8 year old credit card lein against you for 8,500 dollars.

John answers:

Pre-approved: Yes
Approved for an actual loan: It would depend on the lender.

Being pre-approved means nothing.

Maria asks…

home loan with this score?

my hubby and I just got married and my score is TERRIBLE. We are talking like 350. His is 647, so were are thinking of just sending him to the bank. Will that work or will we have to apply together? And can someone get a home loan with a score of 647?

John answers:

My dear dear lady, we need to work on that score, but alas hubby is good to go, so send hubby to the nearest mortgage broker so he can apply for a loan.

The first thing you need to know is if you are qualified to purchase a home. You will not get a contract, talk to a real estate agent or anything unless you know if you can afford to purchase a home and how much this is gonna cost.

So the first thing you should do is contact a “Mortgage Broker’ you may find this animal in your local telephone book. Tell him you plan to purchase a home in the next 6 months or so and want to get “PRE-APPROVED”

Now this person is gonna want to see lots of documents to prove certain things about you and anyone else trying to buy this home with you.

So to get you started I am gonna give you a few of the things you will need

#1 Federal income taxes for 2 yrs as well as W-2 for the same period

#2 Pay stubs covering one complete month.

#3 Six months from bank statements from all the banks you use to include any 401k plans at your place of employment.

This will get you started during your first interview. Now don’t plan on a short trip to the mortgage broker’s office or telephone to fill out the application. There are lots of questions as well as lots of forms to sign that are required by state and local authorities. He will even fax them to you. Make sure they are accurate as possible before returning them.

Once he has the documents signed and back in his hands, he will run a credit check thus finding out your credit score. With this credit score he can now tell you what loan programs you are qualified for. The appropriate monthly payment, how much the lender will allow you to borrow to purchase your home as well as tell you about the interest rate of your mortgage.

Once this has been discussed with you and whom ever is gonna purchase this home with you, now you are able to find a real estate agent or the mortgage broker can recommend one. At any rate you now have your “PRE-APPROVAL LETTER” and now you can look for this home you want to purchase.

Once found you go back to the mortgage broker to complete the transaction. He will order an appraisal to prove the value of the home you have selected. The real estate agent will draw up a sales contract for you and the seller to sign. He will give copies to the mortgage broker, and escrow closing agent.

Your mortgage broker might want additional items from you this is normal just find what he needs he is working on your behalf and acting as go between you and the lender.

Shortly thereafter the mortgage broker will call and set up a date for you to sign your loan docs, again plan on being there for a time. This is not hurry up process.

I hope this has been of some use to you, good luck.

“FIGHT ON”

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