About ENG Lending
How to Have Home Sellers and Real Estate Brokers Working for You
All veteran home buyers have had some questionable experiences with both home sellers and real estate brokers. Some of these might include unreturned phone calls, rescheduled home viewing appointments, delays in receiving answers on offers, etc. You'll be pleased to know you can go from being a frustrated victim to becoming the person truly in charge of your new home search. How, you ask?
Simple: Get a mortgage pre-approval! If you begin your serious search for a new home with a written loan pre-approval in hand, you will see a new level of respect and service from sellers and real estate brokers. Why? They know you are a) a serious, qualified buyer, not just a "tire kicker", and b) you have eliminated much of their concern or questions over whether you can get financing to complete a home purchase. They know your financial situation has already been examined and one or more mortgage lenders want to make you a loan.
Know the Big Difference Between a Pre-Qualification and a Pre-Approval
Pre-qualification for a mortgage and pre-approval for a loan are often assumed to be the same thing. But, they are very different. Here's why. A pre-qualification is
- Merely a "snapshot" of your current income and debt situation. You can even pre-qualify yourself without talking to a loan officer. Using the Internet to learn what debt-to-income ratios are required for mortgage loan programs you like, you can find out what "numbers" you need to qualify for a mortgage loan.
- There is no expressed or implied "commitment" to give you a loan or that you actually fit the criteria for a mortgage loan.
A mortgage loan pre-approval, on the other hand, is a valuable benefit to you. It is usually
- A written statement from one or more mortgage lenders that have examined your financial data and have determined that you qualify for financing. If the rest of your information supports your financial profile, the lender(s) will approve your mortgage loan request.
- A level of commitment from one or more mortgage lenders to give you financing for a specified amount of money. While not a formal commitment, a pre-approved mortgage statement basically means that if the information you've provided to a lender can be supported and there are no other major negative issues that arise during the application process, the lender will approve your mortgage up to the loan amount stated.
- A document that shows sellers and real estate brokers that you are formally qualified to purchase a property in the price range of homes you are currently examining. Should you need less than the maximum amount specified, your lender(s) should have no problem approving such a reduced request.
Why Real Estate Sellers and Brokers Will Work Harder For You
If you have a written home loan pre-approval, you have eliminated between 40% and 60% of the potential problems that prevent a real estate purchase transaction reaching a successful closing. First, you should settle on the preliminary criteria for your new home purchase.
1. Decide where you want to live. As always, the three hard rules of real estate are location, location, and location. Select the location(s) that is right for you.
2. Decide what type of property you want. Are you leaning toward a single family home, condo, town home, medium- or high-rise, etc.? Your choice is important both personally and, often, for reasons influenced by your preferred location.
3. Determine your price range. Get your income, current debt, and projected living expense information together. Use the Internet to learn how to pre-qualify yourself to have an idea of how much house you can afford as well as how large a mortgage loan you can manage.
After you've completed the small, but important checklist above, your search for the right home will have two major components:
- Negotiating an acceptable price for the home you want.
- Getting the best financing you can to purchase the property.
For the moment, place yourself in the shoes of the property seller and your real estate broker. The seller and real estate broker are primarily concerned with three things:
1. Having a buyer make an offer to purchase that is acceptable to both parties.
2. Accepting an offer from a "qualified" buyer. Once an offer is accepted, the seller's property is off the market and cannot be sold to another. If an unqualified buyer's offer has been accepted, the seller may lose a qualified buyer who never even gets to see the property.
3. Having the buyer get a mortgage loan and closing on the sale.
If you were an owner needing to sell your property, or a real estate broker, needing the sale to make his/her income amount for the month, how thrilled would you be if a potential buyer gives you written proof that items 2 and 3 should not pose any problem? Should you be a seller or broker, who would you rather work closely with? A potential buyer that "tells" you they are qualified to purchase without giving you any confirmation, or a person who has a written home pre-approval from one or more mortgage lenders? Easy choice!
How to Complete the Task of Getting Pre-Approved for a Mortgage Loan
As you can see, getting a pre-approved loan can improve the entire home purchase experience for all parties. It's not at all difficult. Follow the steps below and you should have a mortgage pre-approval quickly.
- Collect all of your monthly income and debt information. Do not include living expenses, like heat, telephone, water, etc. Income data should be for your regular monthly income, not occasional overtime, one time earnings, or any other sporadic income. Part-time income is fine if it is ongoing and regular. Get proof of all debt (credit cards, auto, personal, and educational loans), including current balance, monthly payment, and number of payments remaining.
- Find one or more lenders and mortgage loan programs that you like. Use the Internet, visiting websites like ENGLending.com, to learn about loans for which you might qualify and whose terms are attractive to you.
- When you locate one or two lenders offering loan programs you like, learn what information they need to issue you a written mortgage loan pre-approval. Give them the data they want and wait for your loan pre-approval document.
That's it! It is recommended that you think of a pre-approved mortgage loan as not just beneficial to you, but almost as a necessity. You will be much more comfortable and stress free once you have you have a home loan pre-approval. Instead of feeling apprehensive when searching for your new home, you might even enjoy the whole experience.