One of the issues that you should consider when beginning the home buying process is getting approved for a loan upfront. Many real estate agents will want to know that you are eligible to buy the home before they will spend their valuable time showing you homes in the area. But even if you decide not to use an agent, the seller will want the strongest “pre-approval” they can get before they seriously consider your offer. There are three distinct qualifications that a lender can provide you:

A)  Pre-Qualification - A pre-qualification letter is not worth the paper it is written on. This would be where the lender or mortgage broker gives its opinion on how much you can borrow based on the minimal information you have provided. It is an informal analysis of their income, assets and debts. Credit may or may not be pulled. There is no actual verification of the information provided.

B) Pre-Approval – This is a much stronger endorsement of the prospects ability to obtain financing. It is typically completed in the following manner:

1. The prospect completes a loan application
2. Credit report is pulled, carefully reviewed, and verified with the borrower
3. The file is then uploaded electronically through an automated approval system which renders an instant approval. These systems are offered by the quasi governmental agencies Fannie Mae or Freddie Mac. Some of the larger national lenders have their own proprietary systems. For more information see… QUALIFYING FOR A NEW LOAN – THE REAL FACTS

C) Certified Homebuyer - This is the strongest approval without the file actually being underwritten by the lender itself. The difference between this option and a pre-approval is that the borrower’s income, assets and debts are verified by Family Mortgage. The following items will be validated:

1. Satisfactory credit report obtained, reviewed, and approved
2. Sufficient income documented to qualify
3. Sufficient funds are available to close the loan from acceptable sources
4. Tax returns provided and reviewed – if required
5. Whether or not the present home does/does not need to be sold
6. Whether or not the present home does/does not need to be leased
7. No other known credit issues exist to prevent closing

Family Mortgage will gather the documentation in advance to ensure that there will be no unpleasant surprises at the last minute that might derail your closing. This gives you the peace of mind and confidence you need entering into the home purchase negotiation process! Click here to learn more

The seller can contribute towards the buyer's closing costs and/or tax and insurance escrow account set-up. The amount that is allowable by most lenders varies depending on your credit, program selected etc.  But the vast majority of  borrowers fall in the following categories:

0 – 9.99% Down Payment- Seller can contribute up to 3% of the sales price
10% or Greater Down Payment- Seller can contribute up to 6% of the sales price

If you are doing 2 mortgages (example: 80/10/10, 80/15/5 or an 80/20) the seller can usually contribute the full 6% because the lender is concerned with the first mortgage and not the 2nd.

Mail Call: bills, a letter from your Aunt Mary, a circular from a local department store, your monthly bank statement, and an offer for a new credit card that says you’ve been prescreened or prequalified.

A “prescreened” offer of credit? What’s that?

Many companies that solicit new credit card accounts and insurance policies use prescreening to identify potential customers for the products they offer.