#2 In a Series – Observations from a LO: Pre-Approval & Pre-Qualification

Source: Mortgage Pre-Qualifications Are Good (But Pre-Approvals Are Better)

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mortgage products michael nelson equity primeToday, I am going to post some thoughts on Pre-Approvals and Pre-Qualifications.  The article linked above does a great job explaining what these two items are – give it a read. Rather than re-hash what this article does so well – define these terms,  I am going to provide my observations on experiences I have had with borrowers, agents, and lenders on this important topic

Observation #1:  If you are not Pre-Approved, you are not a serious buyer.

Michael Nelson - Equity Prime, LLC The reality is this – if you are making an offer on a home – a pre-qualification letter is not worth the paper it is written on.  A pre-qualification letter by definition does not require  verified income, assets, and liabilities by the loan originator.  It may have a reliable FICO score – it might not.  The lender will pre-qualify your ability to borrower based upon the data you provide over the phone, e-mail, or text.  If the information is 100% correct you might be in luck and get approved.  If the information is wrong…….  let’s just say the experience is not pleasant and a lot of money is at risk.  Originating loans properly requires skill, experience, and certain financial analysis.  Don’t shorten this important process with the false hope that pre-qualification is as thorough as pre-approval.

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Profile of International Home Buying Activity | realtor.org

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Source: Profile of International Home Buying Activity | realtor.org

This report is based on a survey of REALTORS® about Existing Home Sales to resident and non-resident foreigners over the time period April 2014 through March 2015.

2015-Profle-of-Home-Buying-by-International-Clients

 

Lately, realtors have asked me about real estate financing for foreign nationals.  It is not surprising that I am getting this question as I work in Florida, California, and Colorado.  The questions I have received prompted me to do some Googling for general demographic information.

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Observations from a Loan Officer – #1 In a Series

michael nelson equity primeI talk to a lot of people about mortgages, loan programs, interest rates, finances, and other related topics of interest.  It is true that every customer is different and has different mortgage needs. Candidly, that is the fun part of the job – helping people get their piece of the American Dream using the right mortgage.

From time to time, some recurring themes come up from my conversations with different buyers.  I have decided to share my thoughts on these themes as they arise. Thus, this post will be the first in a series of Thoughts & Observations from a Loan Officer.  I don’t know how often I will write these posts but the hope is they will help customers navigate the confusing world of mortgages.

Term will be the first topic of the series

michael nelson equity prime loan

Term – Often overlooked but always important

Customers always want to talk about interest rates.  It is the first question I get – how low are your rates?  My answer is this: the interest rate is important for sure, but the term of the loan should get equal consideration.

Term is the length of the loan – common examples are 15 years, 20 years, 30 years, and  7 year adjustable.  I can’t tell you how many times I have worked with borrowers who are so fixated on the lowest possible interest rate that they will finance $5,000 in points to have a rate discounted by 1/8 or 1/4 – without considering the term of the loan.  Seriously, it is as if they will finance big sums of money so they can brag about their low interest rate to the neighbors.  This brings me to my first point.

Don’t Get Emotionally Invested in the Lowest Possible Interest Rate

Michael Nelson Equity Prime loanLook, if you are sure you will purchase the house over the course of the next 25 to 30 years – spending thousands of dollars on discount points can be a financially sound decision.

However, if there is a possibility that you will sell or refinance a 30 year mortgage in the first 7 to 10 years of the loan – have your loan officer do the math and calculate the “actual” cost of the $5,000 discount.  Most of the time you will be surprised at just how much more money that “low” interest rate actually costs.  Which brings me to my second point.

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How Much House Can I Afford, Comfortably?

Finding out how much house you can qualify for is the first step. It could be even more important to determine your mortgage payment comfort level. Source: How Much House Can I Afford, Comfortably? | Mortgage Rates, Mortgage News and Strategy : The Mortgage Reports I get asked this question …

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One Way to Make Mortgages Easier to Get

The Outlook: The government, investors and lenders are teaming up to revive the market for mortgage bonds issued by private financial institutions, including bonds backed by subprime borrowers, in a bid to broaden access to home loans. Source: One Way to Make Mortgages Easier to Get – WSJ Another article …

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How Long Does It Take To Close A Mortgage?

The faster you can close on a loan, the lower your mortgage rate can be. Know the steps of an approval, and where you cut corners to get to closing quicker. Source: How Long Does It Take To Close A Mortgage? Under the new regulations, closing times for loans has created a lot of …

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