Fed Raises Short-Term Interest Rates – Apply before Monday

The Federal Reserve is making a small increase in the rate it charges banks for short-term loans, a long-anticipated first step towards backing off the easy money policy it has pursued over the past year.

The Fed announced late Thursday that it is raising the discount rate one-quarter percent to 0.75 percent, effective today. Effective March 18, the Fed will also limit the maximum duration of such loans to overnight.

The action was described as a move toward normalizing credit markets in light of improving economic conditions. The Fed said raising the rate should encourage banks to seek private sources of short-term credit rather than turning to the Fed.

It’s not clear what impact raising the discount rate might have on mortgage rates, which have held near all-time lows for much of the past year. However, the Fed’s major impact on mortgage rates has been as a result of its commitment to purchase over $1 trillion in mortgage securities, which are set to conclude in March. Most analysts do not expect mortgage rates to rise significantly until that program concludes.

Some analysts predict that raising the discount rate will have little immediate impact, as relatively few banks use the program. A more significant impact would result from raising the Federal Fund rate, the rate banks charge each other for short-term loans, which the Fed is expected to keep at zero to one-quarter percent for some time to come.

My advice is to get preapproved today and lock in that loan call us to get preapproved at 239-580-9977 or you can apply now before the after weekend rates rise 8 am Monday (after monday its too late) apply now at www.americahomekeyfl.com !

Home Ownership Lowest in 10 Years

The U.S. home ownership rate fell to its lowest level in nearly 10 years in the last quarter of 2009, according to figures released by the Census Bureau.

The home ownership rate of 67.2 percent of U.S. households is the lowest since the first quarter of 2000, and represents a decline from 67.6 percent in the third quarter of 2009. However, the rate has been statistically unchanged over the past year, due to the survey’s 0.5 percent sampling error; the rate in the fourth quarter of 2008 was 67.5.

 

Home ownership rates tend to move slowly, with small changes in the face of both booms and busts. The rate reached all-time highs of 69.2 twice during 2004, but have been gradually declining since. By contrast, home ownership had been generally rising during the previous 20 years, gradually trending up from a low of 63.5 at the end of 1985.

 

The number of owner-occupied homes increased by more than 1 million in 2009, reaching 111,711,000 units, up from 110,668,000 at the end of 2008. The number of occupied rental units increased by about 700,000 units, to 36,673,000.

 

The rental vacancy rate fell to 10.7 percent of all available rates in the fourth quarter of 2009, down from 11.1 percent in the third quarter. Rental vacancies have generally been increasing the past three years, despite increasing foreclosures that would seem to create greater demand for rental properties. The rental vacancy rate stood at 9.5 percent in the first quarter of 2006 and had been generally rising since. The peak of 11.1 percent in the third quarter of 2009 was the highest rental vacancy rate in at least 13 years.

*Courtesy Mortgage Loan.com

GOOD REASONS TO BUY NOW ! 70 DAYS LEFT TILL $ 8k CREDIT GOES AWAY!

Thinking about buying your first home? There are a lot of good reasons to do so right now – bargain prices, low mortgage interest rates and that $8,000 first-time homebuyer tax credit. But for the first-time homebuyer, it can be intimidating.

To begin with, it’s an awfully big investment – potentially, the biggest you’ll ever make – and making the wrong choices can make it even more expensive. But it can also be one of the best and most satisfying decisions you’ll ever make. So how to make sure you’re making the right choices? Fortunately, there are some general guidelines you can follow that help ensure you’re making a good decision.

One of the first things you should do when contemplating buying a home is get to know your local real estate market. Check out listings, both online and in the paper. Go to a bunch of open houses to see what’s available in different price ranges around what you think you might be able to pay. At this point, you’re not really looking for a home; you’re getting a feel for what your money will buy.

Then first Get Pre Qualified

Getting pre qualified before you go any further is key it’s like having a blank check to buy with, do this before shopping for a home! Get Prequalified!

Find a good real estate agent

Ask around, talk to friends who’ve bought a house, ASK US DURING PREQUALIFICATION FOR A REFERAL SO YOU KNOW WHO YOU CAN TRUST AND WE WORK WELL WITH,  or get a buyer’s agent to represent you. In most states, the realtor’s fees are paid by the seller, so there’s no reason for you not to get one – plus they’re supposed to look out for your interests.

How much home do you want?

Think carefully about this. A big yard is nice if you have kids or a dog, but will require more work to maintain. A fixer-upper may sound attractive, but how handy are you with tools? Those do-it-yourself shows and guidebooks make it look easy, but the unavoidable rule of any kind of home repairs are the unexpected little problems that inevitably crop up and which the books said nothing about. Don’t expect a big lifestyle change just because you’re buying a house – choose something that fits the way you live now, with a few enhancements.

Figure out your budget

How much house can you afford? NOT WHAT YOU ARE PREAPPROVED FOR AS YOU HAVE TO LIVE WITH YOUR BUDGET! The general guideline is that you can spend 28 percent of your monthly pre-tax household income on a mortgage payment, including taxes and insurance. But do you want to spend that much? Would you be happier with less house and more to spend on things like vacations or saving for retirement? You don’t want to tie up so much in your house that it’s crowding out the other things you want in life.

Anticipate future expenses

What else are you likely to buy in the next few years? Is your car getting old? Are you planning to start a family? Are you or your spouse thinking about going back to school? And don’t forget home maintenance and repairs – a new roof, septic field or furnace can set you back thousands of dollars, in addition to the regular maintenance and occasional repairs all homes need. And the older the home, the more you need to allow for.

Don’t buy the first house you like

Yes, you might miss a great bargain now and then, but it’s not likely. There are a lot of homes on the market right now. Some real estate agents will tell you that when you find a house you like, you should buy it. Of course they do. They want to sell you a house. The fact is, even if you miss out on this house, you’ll more than likely find others that you like just as much, if not more, particularly in a buyers’ market like we have today.

Don’t think of your home as an investment

Yes, it’s an investment in that you’ll have a lot of money tied up in it, but don’t look at it as something that’s going to make a profit. First and foremost, it’s a residence. Besides, there are other places you can put your money that historically outperform real estate. Better to do that than sink extra money into a bigger house in hopes you can sell it for a fat profit a few years down the line.

Get preapproved now or get more information at www.americahomekey.com

Verifying Your Down Payment, Closing Costs, Assets, Income and Debts

A critical step in the mortgage loan application process is to verify the sources for your down payment, closing costs and assets, as well as documenting income and debts. The lender uses this step to determine your qualifications as a borrower. 

Down Payment & Closing Costs

Documenting that the down payment comes from your savings and that you will have savings and/or assets over and above the down payment gives the lender confidence in your strength as a borrower and your ability to repay the loan.

Take extra care to document the sources for any monies to be used for the down payment or closing costs.

Acceptable Down Payment & Closing Costs Sources

• Cash in a bank account
• Mutual funds / stocks / IRA / 401(K)
• Proceeds from the sale of another property
• Gift from an immediate relative
   

Assets

Collect information about your personal assets that add to your net worth and help to prove your credit worthiness.

 Common Assets Considered in a Mortgage Loan Application

• Stocks, bonds, mutual funds, 401(K) and retirement accounts
• Life insurance
• Personal property estimate – cars, boats, antiques, jewelry, etc.
• Other real estate or property

Income and Employment

The lender will want to confirm your current gross income and have evidence of stable employment. Documentation requirements vary depending upon a number of factors – including the source of income (hourly, salary, salary + bonuses, salary + commission, commission, self-employed, etc.).

Debts

Your lender will want to review a list of all your current debts. This along with your credit report will provide the lender with a snapshot of your obligations. The lender will want to confirm that you will not be overextended when the mortgage payment is added to your current debt load.

Click here to view our application checklist http://www.americahomekeyflorida.com/LoanAppChecklist

Scoring your Credit – How’s your FICO?

Scoring your Credit – How’s your FICO? In today’s increasingly automated society, it should come as no surprise that when you apply for a mortgage, your ability to pay can be reduced to a single number. All the years you’ve been paying your mortgage, car payments, and credit card bills can be analyzed, sliced, diced, spindled and mutilated into a single indicator of whether you’re likely to meet your future obligations. All three of the major credit reporting agencies (Equifax, Experian and TransUnion) use a slightly different system to arrive at a score. The best known is called the FICO score, based on a model developed by Fair Isaac and Company (hence the name) and used by Experian. Equifax’s model is called BEACON, while TransUnion uses EMPIRICA. While each of the models considers a range of data available in your credit report, the primary factors are: Credit History – How long have you had credit? Payment History – Do you pay your bills on time? Credit Card Balances – How much do you owe on how many accounts? Credit Inquiries – How many times have you had your credit checked?

Each of these, and other items, are assigned a value and a weight. The results are added up and distilled into a single number. FICO scores range from 300 to 850, with higher being better. Typical home buyers likely find their scores falling between 600 and 850.

FICO scores are used for more than just determining whether or not you qualify for a mortgage. Higher scores indicate you are a better credit risk, and thus may qualify for a better mortgage rate.

What can you do about your FICO score? Unfortunately, not much. Since the score is based on a lifetime of credit history, it is difficult to make a significant change in the number with quick fixes. The most important thing is to know your FICO score and to ensure that your credit history is correct. Conveniently, Fair Isaac has created a web site (www.myFICO.com) that let’s you do just that. For a reasonable fee, you can quickly get your FICO score from all three reporting agencies, along with your credit report. Also available is some helpful information and tools that help you analyze what actions might have the greatest impact on your FICO score. Each of the credit services offers similar services on their web sites: www.equifax.com, www.experian.com, and www.transunion.com.

Armed with this information, you will be a more informed consumer and better positioned to obtain the most favorable mortgage available to you.

Tips for Accumulating a Down Payment

The Down Payment

The amount you have available for a down payment will affect what types of loans for which you can qualify. Down payments typically range from 3 to 20 percent of the sales price for the property.

Tips for Accumulating a Down Payment

Save Look for ways to reduce your monthly expenditures to save toward a down-payment. You could enroll for an automatic savings plan at your bank to have a portion of your payroll automatically transferred into savings. Most people save a couple of years for their down payment. Borrow the down payment from your retirement plan Check the provisions of your retirement plan. You can borrow funds from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Be sure you understand the tax consequences, repayment terms and/or possible early withdrawal penalties. Move You may be able to save additional funds if you can move into less expensive housing. Reduce other higher interest rate debt Paying off credit cards will initially reduce your savings, but the money you will save from higher interest rates will pay-off in the long run. Make a deal with the seller In some circumstances, it is appropriate to ask the seller to carry a second-mortgage to cover your down payment. Typically, you will pay a slightly higher rate for this second mortgage. Sell some investments Get a second job and save your earnings Skip a year’s vacation Gift from Family Parents and other family members are often anxious to help children buy their first home and may have the means to give you a gift of money for a portion or all of your down payment.

 

Alternative Sources

No-down and low-down Mortgages FHA Loans The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low- to moderate-income families qualify for mortgages. FHA assists first-time buyers and others who would not qualify for a conventional loan, by providing mortgage insurance to private lenders. Interest rates for an FHA loan are usually the going market rate, while the down payment requirements for an FHA loan are lower than conventional loans. The required down payment can be as low as 3 percent and the closing costs can be included in the mortgage amount.   VA Loans VA Loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can qualify for a VA Loan, which usually offers a competitive fixed interest rate, no down payment and limited closing costs. While the VA does not issue the loans, it does issue a certificate of eligibility required to apply for a VA loan.   Piggy-back Loans A second mortgage that closes with the first. Often the first mortgage is for 80% of the purchase price and the “piggyback” is for 10%. The home buyer covers the remaining 10% with their down payment. (Some lenders will write a second mortgage of 15% or even 20% of the purchase price.)   “Carry Back” Mortgage In the case of the seller “carrying back a second mortgage”, the seller loans you part of his or her equity. In this scenario, you would finance the majority of the loan with a traditional mortgage lender and finance the remaining amount with the seller. Typically you will pay a slightly higher interest rate on the loan financed by the seller.

 

Housing Finance Agencies These agencies offer special loan programs to low- and moderate-income buyers, buyers interested in rehabilitating a home in a targeted area, and other groups as defined by the agency. Working through a housing finance agency, you can receive a below market interest rate, down payment assistance and other incentives. The primary mission of Housing Finance Agencies is to boost home ownership in targeted areas, among first-time buyers and those with little money for down payments. Most of these non-profit agencies were funded with state government seed money and now operate independently.Click here for a list of Housing Finance Agencies.

 

Documenting Your Down PaymentDocumenting that the down payment comes from your savings and that you will have savings and/or assets over and above the down payment gives the lender confidence in your strength as a borrower and your ability to repay the loan.Take extra care to document the sources for any monies to be used for the down payment or closing costs. Acceptable Down Payment & Closing Costs Sources Cash in a bank account Mutual funds / stocks / IRA / 401K Proceeds from the sale of another property Gift from an immediate relative

Click here to learn more about verifying your down payment, closing costs, income and debt.

Or visit http://www.americahomekryflorida.com

Understanding how escrow works

Escrow
To finalize the sale of the home a neutral, third party (the escrow holder, a.k.a. escrow agent) is engaged to assure the transaction will close properly and on time. The escrow holder insures that all terms and conditions of the seller’s and buyer’s agreement are met prior to the sale being finalized, including receiving funds and documents, completing required forms, and obtaining the release documents for any loans or liens that have been paid off with the transaction, assuring you clear title to your property before the purchase price is fully paid.

The documentation the escrow holder may be collecting includes: Loan documents Tax statements Fire and other insurance policies Title insurance policies Terms of sale and any seller-assisted financing Requests for payment for various services to be paid out of escrow funds

Upon completion of all instructions of the escrow, closing can take place. All outstanding payments and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the property is then transferred to the seller and appropriate title insurance is issued as outlined in the escrow instructions.

At the close of escrow, payment of funds shall be made in an acceptable form to the escrow. As your real estate agent, I’ll inform you of the acceptable form.

The Escrow Holder Will:

 

 

 

 

The Escrow Holder Won’t:

 

 

• Prepare escrow instructions
• Request title search
• Comply with lender’s requirements as specified in the escrow agreement
• Receive funds from the buyer
• Prorate insurance, tax, interest and other payments according to instructions
• Record deeds and other documents as instructed
• Request title insurance policy
• Close escrow when all instructions of seller and buyer have been met
• Disburse funds and finalize instructions

 

 

 

 

• Give advice – the escrow holder must maintain neutral, third-party status
• Offer opinions about tax implications

Mortgage Escrow Account

A Mortgage Escrow Account is established to pay on-going expenses while there is a loan on the house. These expenses include property taxes, home insurance, mortgage insurance, and other escrow items. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

Please visit our website at www.americahomekeyflorida.com for more information.

Get the best mortgage loan for you

When you decide to buy a home or refinance a mortgage in Florida, it’s a big step. You can trust us to find the loan program that’s best for you.

So we say:

Finding the right house is only half the battle; you also need to find the right mortgage loan.

 

Just as no two houses are alike, no two mortgage loans are alike either. Interest rates and repayment terms are just the beginning.

 

The Mortgage Pros at America Home Key, Inc specialize in matching homebuyers with the right mortgages.

 

We’re a Direct Lender in Florida, with Local Processing and we are committed to providing the highest quality service available anywhere.

Buying a new home

is a source of anxiety, frustration — and a huge sense of accomplishment. You didn’t pick the house that was best for someone else, you picked the one that’s right for you! Trust us as professionals to find the Florida mortgage loan that best fits your needs, too.

We are about “Less paperwork and more personal attention” means you enter a frustration-free zone from application to decision. Getting the right mortgage loan is like getting the keys to your new house! We can help you get there. Our Florida Mortgage Bankers are here to assist you!

Refinancing your current Florida mortgage

has never been easier. If you thought refinancing meant getting buried under mountains of paperwork, think again! We make it easy and worry-free to reduce your interest rate and monthly payment. We can even help you pay down your balance more quickly for comparable monthly payment. Let our professionals guide you to the very best refinanced loan!Tapping into your Florida home equity

is easier than ever before. You’ve been paying down your balance, and property values have gone up! Tap into that wealth and reward yourself. We’ll help with the best program to fit your goals.

Our Mortgage Bankers give you the personal attention you deserve and treat you with the respect due a valued customer. We understand you’re making a commitment in buying a new home, refinancing a mortgage, or cashing out your home equity. So we make a commitment to you. We will help you qualify, apply and be approved for the right mortgage loan for you. Not anyone else!

We service the following counties and cities in Florida :

Alachua | Baker | Bay | Bradford | Brevard | Broward | Calhoun | Charlotte | Citrus | Clay | Collier | Columbia | DeSoto | Dixie  | Duval | Escambia | Flagler | Franklin | Gadsden |  Gilchrist | Glades | Gulf | Hamilton | Hardee | Hendry | Hernando | Highlands | Hillsborough | Holmes | Indian River | Jackson | Jefferson | Lafayette | Lake | Lee | Leon | Levy | Liberty | Madison | Manatee | Marion | Martin | Miami-Dade | Monroe | Nassau | Okaloosa | Okeechobee | Orange | Osceola | Palm Beach | Pasco | Pinellas | Polk | Putnam | Santa Rosa | Sarasota | Seminole | St. Johns | St. Lucie | Sumter | Suwannee |Taylor | Union | Volusia | Wakulla | Walton | Washington |

Serving FHA, VA, USDA, Conventional and Jumbo mortgage loans in every city in Florida including: Alachua | Altamonte Springs | Anna Maria | Apalachicola Apopka | Atlantic Beach |Auburndale |Aventura |Avon Park | Bal Harbour | Bartow | Bay Harbor Islands | Boca Raton | Bonita Springs | Boynton Beach | Bradenton | Brooksville | Cape Canaveral | Cape Coral | Casselberry Celebration | Chipley | Cinco Bayou | Clearwater | Clewiston | Cocoa | Cocoa Beach | Coconut Creek | Coral Gables | Coral Springs | Crystal River | Dania Beach | Davie | Daytona Beach | Deerfield Beach | DeFuniak Springs | DeLand | Delray Beach | Deltona | Destin | Dunedin | Eagle Lake | Edgewater | Edgewood | Eustis | Fort Lauderdale | Fort Meade | Fort Myers | Fort Myers Beach | Fort Pierce | Fort Walton Beach | Fruitland Park | Gainesville | Greenacres | Green Cove Springs | Gulf Breeze | Gulfport | Haines City  | Hallandale Beach | Hawthorne | Hialeah | Hialeah Gardens | Highland Beach | Hollywood | Holly Hill | Holmes Beach | Homestead | Hypoluxo | Indialantic | Jacksonville | Juno Beach | Jupiter | Key Biscayne | Key West | Kissimmee | LaBelle | Lady Lake | Lake Alfred | Lakeland | Lake Mary | Lake Park | Lake Wales | Lake Worth | Lantana | Largo | Lauderdale By The Sea | Lauderhill | Leesburg | Lighthouse Point | Longboat Key | Longwood | Maitland | Marco Island | Margate | Melbourne | Melbourne Beach | Miami | Miami Beach | Milton | Minneola | Miramar | Mount Dora | Naples | Neptune Beach | New Port Richey | New Smyrna Beach | Niceville | North Miami | North Miami Beach | North Port | Oakland Park | Ocala | Ocean Ridge | Ocoee | Okeechobee | Oldsmar | Orange Park | Orlando | Ormond Beach | Oviedo | Palatka | Palm Bay | Palm Beach | Palm Beach Gardens | Palm Coast | Palmetto | Panama City | Panama City Beach | Pembroke Pines | Pensacola | Pinecrest | Pinellas Park | Plant City | Plantation | Pompano Beach | Ponce Inlet | Port Orange | Port St. Lucie | Punta Gorda | Rockledge | Royal Palm Beach | St. Augustine | St. Augustine Beach | St. Cloud | St. Pete Beach | St. Petersburg | Safety Harbor | Sanford | Sanibel | Sarasota | Satellite Beach | Seaside | Sebastian | Sewall’s Point | Shalimar | Stuart | Surfside | Tallahassee | Tamarac | Tampa | Tarpon Springs | Tavares | Temple Terrace | Titusville | Treasure Island | Valparaiso | Venice | Vero Beach | Wellington | West Melbourne | West Palm Beach | Weston | Wilton Manors | Winter Garden | Winter Haven | Winter Park | Winter Springs |

Please navigate our website at www.americahomekeyflorida to learn more about us, what we do for you, and how easy it is to get started. Or apply now to get started! I cannot help you if you dont apply or e-mail your questions! cashton@americahomekey.com

Rate Lock Advisory 2/17/2010

Wednesday’s bond market has opened in negative territory following slightly stronger than expected economic data and a positive open for stocks. The stock markets are extending yesterday’s afternoon rally, but to a much less degree. The Dow is currently up 44 points while the Nasdaq has gained 12 points. The bond market is currently down 9/32, but we may still see a slight improvement in this morning’s rates compared to yesterday’s morning pricing due to strength in bonds late yesterday.

This morning’s first piece of economic data was January’s Housing Starts. It revealed a larger than expected increase in starts and an upward revision to December’s starts, hinting that the housing sector may be stronger than thought. Rising starts of new homes indicates more sales or stronger levels of optimism by builders. But, this data is not considered to be highly important to the markets or to mortgage rates. It is the week’s least important data and has not ha d much of an influence on this morning’s mortgage pricing.

Also posted this morning was January’s Industrial Production data. It showed a 0.9% increase in output at U.S. factories, mines and utilities that exceeded forecasts. That indicates a level of manufacturing sector strength that is considered bad news for bonds and mortgage rates. However, this data is considered only moderately important, so it has not hurt mortgage rates this morning.

The third event of the day will be the release of the minutes from last FOMC meeting later today. Traders will be looking for any indication of the Fed’s next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. I am expecting some volatility in the markets after the minutes are released.

The Labor Department will post January’s Producer Price Index (PPI) early tomorrow morning. It measures inflationary pressures at the pro ducer level of the economy and is considered to be an important measurement of inflation. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. It is expected to show an increase of 0.8% in the overall reading and a 0.1% rise in the core data. Good news for bonds would be a decline in both readings, particularly the core data.

Also tomorrow morning will be the release of the Leading Economic Indicators (LEI) for January. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.5% increase, meaning that economic activity may rise in the near future. A smaller than expected rise would be good news for the bond market and mortgage rates.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Lock if my closing was taking place between 21 and 60 days… Lock if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

For more information or to apply now visit www.americahomekeyflorida.com

How important is it to be pre approved? Very Important …..

When buying a home, it is very important to be Pre-Approved for your mortgage in advance. The reasons for this vary from calculating affordability to presenting a stronger contract. The issue is that the definition of this Pre-Approval varies depending on the context in which it is used. This guide should help you understand what Sellers are asking for when they advertised “Pre-Approved Buyers Only”.

The phrase “Pre-Approved” brings up a question of semantics. The best way to further this discussion is to define the terms Pre-Qualification and Pre-Approval.

Pre-Qualification is a process whereby the buyer’s income, credit and assets are analyzed. There are several factors that are measured which are important to lenders when they are underwriting your file. They are:

• Affordability – How much property you can afford?
• Credit Score and History – Have you paid your past debts?
• Ability to Repay – Debt Ratios = expenses / income
• History of Savings – Do you overspend every month?
• Stability of Income – Has your pay dropped or spiked this year?
• Stability of Employment – How long at your current job?
• Availability of Down Payment – How much can you put down?
• Adequate Reserves – Can you afford the mortgage without income for a certain amount of time? Can you afford to close?

It is essential that all of these factors are weighed to give you a legitimate chance of getting the loan approved.

The findings in the Pre-Qualification will also help you and your Realtor decide the home prices to search in the MLS. This prevents falling in love with a house just to find up that is $50,000 out of your price range.

Pre-Approval is a step PAST what you see above. It is actually only available after your complete loan file is submitted to a lender. The additional steps required to come up with a Pre-Approval are:

• Signing of Loan Application
• Collection of Bank and Asset Account Statements
• Collection of Tax forms and 1009s / W-2s
• Verification of Employment
• Verification of Business Owned if Self Employed
• Submission of all documents to Lender

At this point the lender will underwrite the loan file and come back with a Conditional Approval – a.k.a. a Pre-Approval. This is only a Conditional Approval because there will be conditions that the lender places on the loan that must be met prior to closing. These conditions will be:

• Receipt of satisfactory, fully executed sales contract
• Appraisal meeting or exceeding value of house
• Re-pull of credit if it takes longer than 30 days
• Updating of all bank statements and asset accounts

After these documents are reviewed and signed off on by the Underwriter, the loan should have Final Approval or Commitment and be Cleared to Close.

A Pre-Qualification is therefore very important. It is not a guarantee, though!

As you can see by the two descriptions, the Pre-Qualification is just a necessary step by the Realtor and Mortgage Originator in the homebuying process. It helps determine how much house a buyer can afford. It also helps outline how much of a payment the buyer can handle based on real numbers like income, savings, expenses and credit scores.

“Pre-Approved Buyers Only”

When trying to satisfy this Seller requirement, a buyer should realize that the difference in a Letter of Pre-Qualification and a Letter of Pre-Approval is much more than just semantics. It can take between a few days and a couple of weeks to get a pre-approval. It all depends on the particulars of the loan file and the lender itself. This is why it is important to get started on the loan application before shopping for the property

A Letter of Pre-Qualification should only detail that a buyer appears able to purchase a home at a particular price point based on the information they provided. The caveat to a letter of Pre-Qualification is that it should always say that it is not a commitment or promise of one in the future but instead a judgement based on the experience of the parties involved.

A Letter of Pre-Approval is the document that is actually prescribed by Realtors and desired by Sellers. This is proof that the lender has already approved the buyer for a loan and is just waiting on a property to put with the loan. This is the “Golden Ticket” that you will need need to have in hand to successfully move along the path to homeownership.

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