How to Estimate Mortgage Pre-Approval Amount, mortgage preapproval.#Mortgage #preapproval

How to Estimate Mortgage Pre-Approval Amount

In a preapproval, a lender examines your financial information, including evidence of your income and your credit report, to determine how much it will be willing to lend. To estimate how much you re likely to qualify for, you ll need to calculate your income and account for every debt you re responsible for, not just those associated with housing. Unlike a prequalification, which relies on the data you provide, preapproval is a strong indicator of the maximum size of your mortgage. Preapproval letters generally are valid for 60 to 90 days.

Determining Factors

Key factors in determining how much you ll be able to borrow include:

  • Your debt to income ratio, or DTI
  • Your down payment
  • Your credit history
  • The value of the property

Your debt-to-income ratio is the single biggest factor in determining whether your preapproval request will be approved and for how much, according to a Fair Isaac Corporation study of credit risk managers in the United States and Canada. Two DTI ratios are considered — the front-end ratio and the back-end ratio.

Front-end DTI Ratio

The front-end ratio measures what percentage of your income will go towards your housing costs. The lender takes your pre-tax gross income from all sources. It then calculates how much your monthly housing expenses are projected to be, including your mortgage principal and interest, property taxes and insurance. The target number here is 28 percent — lenders like to see your housing expenses at or below 28 percent of gross monthly income, though they may go higher if the rest of the application is strong.

Back-end DTI Ratio

Your back-end ratio takes your gross income and measures it against all recurring debts — not just your mortgage, but also any car payments, student loans, credit card debt payments and personal loans. The maximum lenders generally accept here is 43 percent, and you re more likely to see lenders balk at someone close to that number than you are to find a lender that will exceed it. You may get more wiggle room here if some of the loans are within a few months of being paid off.

PITI Ratio

You ll also need to calculate your PITI. This examines your principal, interest, property taxes and insurance as a percentage of your income. The standard here is 29 percent — you ll have trouble being approved for a loan if yours is higher, particularly if it is over 32 percent.

Down Payment and LTV Ratio

If your ratios aren t quite up to standards, you may be able to win preapproval for a mortgage anyway if you re prepared to make a sizable down payment. The more you put down, the more skin you have in the game and the more you have to lose if you default. This is particularly true if you can afford to pay 20 percent or more of the price of the home. The down payment amount is expressed in the loan-to-value ratio,and the higher the LTV, the bigger the risk you are. If you re prepared to pay $20,000 down on a $100,000 home, your LTV is 80 percent — a very respectable number. That same amount on a $400,000 home would leave an LTV of 95 percent, and place you in a higher risk pool that would decrease your chance of winning preapproval.

Sample Calculation

Say you make $5,000 per month and have $750 in monthly expenses not related to housing. Your maximum monthly housing expenses for most lenders would be $1,400 — or 28 percent according to your front-end DTI ratio. However, your back-end DTI ratio would include your other debts. At the 43 percent figure, that would be $5,000(0.43)-750 — which in this case gives you the same $1,400 figure. Your PITI at 29 percent would be $1,450 ($5,000 x 0.29).

As a result, you could likely be preapproved for a mortgage that would require an estimated $1,400 per month once taxes and insurance were factored in, assuming your credit score and LTV ratio satisfied the lender.

Mortgage best-buy comparison, best mortgages.#Best #mortgages

Mortgage Best Buys Beta

Unlike many other best buy tables we don’t just include broker only mortgages, we also show you the direct deals. The only mortgages that might be available that we can’t show are exclusives that are available to specific brokers.

Step-by-step help

Read our full Free Printed guide to first-time mortgages

Step-by-step help

Read our full Free Printed guide to Remortgaging

How this site works

We think it’s important you understand the strengths and limitations of the site. We’re a journalistic website and aim to provide the best MoneySaving guides, tips, tools and techniques, but can’t guarantee to be perfect, so do note you use the information at your own risk and we can’t accept liability if things go wrong.

  • This info does not constitute financial advice, always do your own research on top to ensure it’s right for your specific circumstances and remember we focus on rates not service.
  • Do note, while we always aim to give you accurate product info at the point of publication, unfortunately price and terms of products and deals can always be changed by the provider afterwards, so double check first.
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  • We often link to other websites, but we can’t be responsible for their content.
  • Always remember anyone can post on the MSE forums, so it can be very different from our opinion. is part of the MoneySupermarket Group, but is entirely editorially independent. Its stance of putting consumers first is protected and enshrined in the legally-binding MSE Editorial Code.

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Reagan Millsap – Mortgage Loan Officer – Bank of America, mortgage loan officer.#Mortgage #loan #officer

Reagan Millsap

Mortgage loan officer

Mortgage loan officer

Reagan Millsap

I m Reagan, your local Oklahoma City Wealth Management Lending Officer helping families finance their homes. Fall is the season of change and a good time to prepare for holiday spending. If you re thinking about buying a home, refinancing your current one or applying for a home equity line of credit, I m here to help you explore your options. Don t hesitate to contact me if you have any questions or want to get the process started.

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  1. Home Loan Navigator is not available on certain loan types. Please contact a lending specialist for more information.
  2. The origination fee reduction is available to clients who are enrolled or are eligible to enroll in Preferred Rewards at the time of application for a new purchase or refinance loan (for co-borrowers, at least one applicant must be enrolled or eligible to enroll). Amount of the reduction ($200 for Gold tier, $400 for Platinum tier and $600 for Platinum Honors tier) is based on your eligible tier at the time of mortgage application and is not subject to adjustment. This reduction will not exceed the amount of the Lender Origination Fee. Eligibility will be available three or more business days after the end of the calendar month in which you satisfy the requirements. Some discounts cannot be combined. For details on requirements, visit the Preferred Rewards section of the Personal Schedule of Fees. Benefit is non-transferable.

Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.

Customer reviews are collected and moderated directly by Zillow , a third party unaffiliated with Bank of America, and are subject to Zillow s policies and guidelines. Each customer review and the combined rating is shared for informational purposes only and may not reflect the most recent customer reviews. Bank of America makes no guarantees about the claims made in any customer review or the accuracy and/or completeness of such reviews. Bank of America assumes no liability for any statements made in customer reviews and/or actions taken in reliance upon such customer reviews.

Mortgage loan officer

Bank of America, N.A. Member FDIC. Equal Housing Lender Mortgage loan officer

Bank of America Corporation. All rights reserved.

Mortgage Flyers, Software, Real Estate Flyers, Open House Flyers, Mortgage Marketing, mortgage marketing.#Mortgage #marketing

Custom flyers with detailed loan options

Mortgage Marketing System:

Loan Officers: Real Estate Flyer Builder TM (RFB) software can give you the edge over the competition. Generate Open House, Rent vs. Buying, FSBO and Mortgage flyers with detailed loan options. RFB is an effective tool for reaching buyers and real estate agents.

Each loan officer has the option to either make flyers for real estate agents or allow agents to make their own flyers. The rates, loans and settings are controlled by the loan officer providing the service.

  • Loan officers determine the real estate agents that have access to their RFB program. New agents can be given access to the program for a limited time. Agents that consistently provide referrals can be given indefinite use. When a real estate agent enters the user name and password provided by the sponsoring loan officer, RFB automatically inputs the agent’s and loan officer’s contact information on all printed flyers
  • RFB allows for absolute control over 3 sets of 10 loans. The loan officer determines the name of each set, the loans that are displayed within each set, the order of the loans and the name of each loan. Each loan can be customized to fit underwriting guidelines. Sample loans are provided
  • Loan officers can easily publish updated realtor information, loans and rates to the RFB web server. The published information is instantly available to the realtors being sponsored
  • RFB has a feature that allows loan officers with individual accounts to share rates and loans. Example: The manager of a mortgage company maintains the RFB loans and rates for loan officers at his company. The individual loan officers only input the agents they are sponsoring into their RFB
  • Office Account: Each RFB account can accommodate up to 30 loan officers and 300 real estate agents. One loan officer can be added to the account for every 10 real estate agents being sponsored. Example: A mortgage office with 8 loan officers could open one account sponsoring 80 agents. All 8 loan officers could use the system. One person in the office would manage the rates, loans, settings and real estate agents
  • Loan officers can customize the RFB program they distribute to realtors. Company logo and loan officer’s picture can be remotely added to each page of the program. Logos can be inserted on all flyers

Real Estate Agents: Free unlimited use through a loan officer. Generate open house, mortgage and pre-qualification flyers. Provide buyers with detailed accurate loan options.

Real Estate Flyer Builder TM Software:

Software Features:

  • Print, save or email flyers
  • Flyers sized to fit any paper or photo size
  • Photo quality output in PDF and JPEG formats
  • House pictures are cropped and sized to fit perfectly
  • Open house flyers display up to 12 house pictures
  • Change flyer font, colors and background image
  • Customizable banner can be added to the left or top of any listing flyer– Bank Owned, Price Reduced, etc.
  • Import/export unlimited number of flyer templates
  • Dynamic Flyers- real estate flyers mortgage flyers are programmed to automatically adjust based flyer output size, number of loans, length of loan officer’s disclosure, ARM disclosures, flyer settings, etc…
  • Custom templates– convert any printable document into a template that will automatically insert loan officer’s and agent’s contact information, logo and picture
  • Real Estate Agents can be assigned a username and password- Agents build flyers using the loan officer’s rates, loans and settings
  • Loans and rates can automatically update from a corporate account or another Real Estate Flyer Builder account
  • Rates can be set to automatically adjust with the loan size or with a market- 10 YR Treasury yield, MTA yield, national averages, etc…
  • Up to 3 sets of 10 customizable loans can be used– Conforming, FHA, FHA 203K, Home Path, HomePath Renovation, Combo, ARMS, etc.
  • Flyers will adjust to fit the number of loans chosen
  • Pre-qualify buyers in seconds
  • Rent vs. Buying comparisons
  • Multiple loan officers can share an office account

Advantages of both desktop software web based software:

  • Software can be installed on an unlimited number of computers. The loan officer’s rates, loans, settings, agents, logo, disclosure, etc. are automatically updated on each computer. Data is saved on remote server
  • Install and run software without computer administrative rights
  • Internet connection is not required to use software
  • Advanced features that are only supported by desktop software
  • Software performance is not affected by internet/server speed

Software Screenshots:

Mortgage marketing Mortgage marketing Mortgage marketing Mortgage marketing


  • Loan officer’s company disclosure is displayed on the bottom of each flyer. Flyers automatically resize to fit any length of disclosure. Disclosure font size can also be increased or decreased
  • Real estate agent’s disclosure can be added to disclosure statement
  • An ARM disclosure is automatically calculated and added to the disclosure statement for each ARM loan displayed on the flyer
  • The APR is calculated and displayed for each loan
  • Loan officer’s and agent’s license number are included in contact information
  • Corporate accounts– company’s logo and disclosure can be remotely managed for all loan officers using the corporate account
  • RESPA Compliance- Loan officer cost per real estate agent is about $2.80 per month. When the agent prints the flyers, the total cost is shared

Corporate Accounts:

  • Banks and mortgage companies can select the logo and disclosure that will appear on all flyers printed by their loan officers. The logo and disclosure can be locked to prevent the loan officer from making changes. If the company’s logo or disclosure change, the change will be instantly made for corporate account users
  • We can bill either the corporate account or individual loan officers
  • Remotely provide rates and loans to loan officers that are using their corporate account
  • For more information contact us at [email protected]

Mortgage Marketing Diagram:

Using Real Estate Flyer Builder TM , loan officers increase referrals, real estate agents attract additional clients and buyers receive customized detailed loan information.

Mortgage marketing

Tutorial Videos:

Video- Make a Listing Flyer:

Mortgage marketing

Video- Loan Officer Setup:

Mortgage marketing

Flyer Samples:

Below are samples of the unlimited flyers that can be generated:

Open House Flyers:

Mortgage marketing

Mortgage marketing

Mortgage marketing

Mortgage marketing

Mortgage marketing

Mortgage marketing

Real Estate Flyer Builder TM – all rights reserved

Offset Mortgages – Compare The Best Offset Mortgage Deals, best mortgages.#Best #mortgages

Offset mortgages

By Mark Hooson on Monday 21 March 2016

In this Article

Offset mortgages provide a practical and sophisticated means of balancing your savings against the debt of your mortgage – and they are becoming increasingly popular among the nation’s homeowners.

What is an offset mortgage?

An offset mortgage links your savings, and in some instances your current account, to your mortgage. As a result, instead of earning interest on your savings, you pay less interest on your mortgage.

For example, if you had a £100,000 mortgage and £20,000 in savings offset against it, you would only pay interest on £80,000. However, your monthly mortgage payments will probably be based on the full £100,000 loan meaning you effectively over pay each month. As a result not only do you pay less interest on your mortgage, you will also pay it off more quickly.

Some lenders will let you reduce your monthly payments so that they are based on the value of the outstanding mortgage once the savings have been offset. However, while this may help bring down your repayments you won’t pay your mortgage off any quicker.

Offsetting can also be extremely tax efficient. Ordinarily you pay income tax on any interest you earn on savings (apart from ISAs). However, if you offset your savings against your mortgage, you don’t earn any interest so there is no tax to pay.

Offset mortgages only account for about 6% of the total mortgages although with savings rates in the doldrums because of the low Bank of England base rate, they are becoming more popular. If you are looking for a new mortgage, an offset is definitely worth considering – it won’t be the right option for everyone though.

What types of offset mortgage are available?

As with standard mortgages there are fixed and variable rate offsets available. However, most of the offset products currently available require a deposit of at least 25%.

Some deals will allow you to offset your current account as well as your savings. You may also be able to link your cash ISA. The more savings products you can link to your mortgage, the harder your cash will be working to reduce your debt. It is important to note however, that your savings and mortgage have to be with the same provider – you can’t link a savings or current account to your mortgage if it is with a different bank.

What are the advantages of offset mortgages?

With an offset loan, you pay no tax on your savings interest, and the rate you earn is the same as your mortgage rate; as mortgage rates are typically higher than easy access savings rates, you effectively get a better return.

A key benefit is the flexibility you get, as you can always retain access to your linked savings account or current account, meaning you can dip into it at a future date as and when you need to.

By contrast, if you’d used money from your savings pot to overpay your mortgage and then decided you needed some of that cash back, you would not have the same flexibility.

While offset deals are particularly beneficial to higher-rate taxpayers and those with a large amount in cash savings, lower-rate taxpayers can benefit too.

If you have savings as well as mortgage debt, an offset mortgage can offer the best of both words, as you will still be able to access that nest egg. However, you need to be aware that if you withdraw money from your savings at any point, there will be less in the pot to offset against the mortgage.

Offsetting can be an especially useful option for the self-employed who put money aside for their tax bill, as these individuals can make their money work that little bit harder – before handing it over to the taxman.

Not for everyone though.

While an offset mortgage will work well for many people, offsetting won’t be the most suitable option for everyone.

You tend to pay a slightly higher rate of interest than on a standard mortgage, although the premium has narrowed in recent years. But it means that if you don’t have much in savings, offsetting may not work out to be best value.

There is no hard and fast rule which says if you have more the £x in savings an offset is the best option – it will depend on the mortgage and savings rates available at the time.

How can MoneySuperMarket help?

In the past, borrowers opted for a standard mortgage without giving it a second thought, but as offset deals have become more affordable, an offset is now an option that’s definitely worth considering.

At the same time, as rates have fallen, more lenders have entered the offset arena – with some now offering an offset option across their whole range of mortgage products. That said not all lenders offer offsets.

One of the best ways to see what offset mortgage products are available is to use a comparison site. With MoneySupermarket you can compare the rates available on offset and standard mortgages to work out which is most suitable for you and then apply online.

And remember, when comparing mortgages it is important to factor in the arrangement fee as well as the interest rate as fees vary significantly.


Find this helpful? You can share this article

Compare Mortgage Rates at GoCompare, compare mortgage lenders.#Compare #mortgage #lenders


Mortgage comparisons by Financial Services Ltd and London Country Mortgages Ltd [1]

  • Call L C on 0800-073-1959 for fee-free award-winning mortgage advice, or request a call back [2]
  • Find fixed and variable-rate mortgage products for residential and buy-to-let properties
  • Compare mortgage rates from multiple lenders across the UK mortgage market

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Try our mortgage calculator and compare rates

Our mortgage service can help you compare rates and deals from across the UK market.

Need more information?

We’ve partnered with expert mortgage advisers London and Country (L C). L C is the largest fee-free independent mortgage broker in the UK and has won awards for its outstanding and independent advice.

L C can help you compare thousands of mortgage deals, including exclusives you can’t get anywhere else.

That means you can be confident you’ll get the right product, whether you’re a first-time buyer just getting on the property ladder, a homeowner looking to remortgage to a more competitive deal, or a landlord searching for the right buy-to-let mortgage.

Click ‘Get Rates’ above to try our mortgage comparision service – it’ll help you find the best-buy mortgages most relevant to you and tell you what your monthly repayments might be.

Our easy-to-understand comparison table lets you choose to view fixed-rate or variable-rate mortgages, on a repayment or interest-only basis.

You’ll find all the important information clearly laid out, including the mortgage rate, how long any introductory rate lasts, the lender fees and if there are any additional benefits, such as cashback.

If you see a mortgage that interests you, you can click ‘More details’ to check the availability, loan to value, and other relevant information.

If you need more help choosing, you can speak to one of L C’s expert advisers by requesting a call back, or by phoning 0800-073-1959. [2]

Alternatively, if you find a mortgage you like the look of in our comparision table, just click ‘Enquire’ and a simple form will ask for your basic contact information and for you to select a convenient time for L C to call you back.

Did you know.

  • 28% of UK consumers have never switched their mortgage lender
  • Only 8% have switched their mortgage in the last five years [3]

Arranging a loan for a property is a big step, but it needn’t be a step into the unknown with our comprehensive set of mortgage guides and frequently asked questions.

You’ll find dedicated pages on options for first-time buyers, buy-to-let, low-deposit mortgages, remortgages and self-build mortgages.

There’s also a wealth of information on aspects of loans and house buying, such as how much you can borrow, raising a deposit, different types of deal, fees, legal requirements, surveys, gazumping and stamp duty.

Even when you think you’ve found your dream home and decided which mortgage to apply for, there’s still plenty to consider; our guides can tell you more about subjects like negative equity and what to do if you have trouble making repayments.

Learn about buildings insurance, plus other products you may want to think about, such as life insurance, critical illness cover and mortgage protection insurance.

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    What does the base rate cut mean?



    [1] For information only mortgage comparison introduces customers to Financial Services Limited which is authorised and regulated by the Financial Conduct Authority.’s relationship with Financial Services Limited is limited to that of a business partnership, no common ownership or control rights exists between us. Please note, we cannot be held responsible for the content of external websites and by using the links stated to access these separate websites you will be subject to the terms of use applying to those sites

    For mortgage advice introduces customers to London Country Mortgages Ltd which is authorised and regulated by the Financial Conduct Authority.’s relationship with London Country Mortgages Ltd is limited to that of a business partnership, no common ownership or control rights exist between us

    [2] Calls made to you by London Country are completely free of charge. If you decide to call London Country, calls from mobiles and landlines are free of charge. Your call may be monitored or recorded for training and security purposes

  • First Time Home Buyer, first time mortgage.#First #time #mortgage

    First-Time Home Buyers

    Loans insured by the Federal Housing Authority (FHA) are designed to help everyone realize the dream of owning a home. And they’re ideal for first-time home buyers! Because the FHA insures these mortgages, FHA lenders can work with borrowers who’ve had credit problems, collections, past bankruptcy filings, or debt-to-income ratios that are higher than normally allowed.

    Applying for an FHA loan

    Getting in touch with a specialist through MyFHA is simple. We’ve combined the speed and ease of the Internet with the hands-on help our customers expect. Once you click online, we enter your information into our database and begin a preliminary review. Then, we match you with the right specialist for where you are right now.

    During the phone interview, your specialist will discuss with you where you are right now and help you determine your best way forward. If you don’t pre-qualify right away, your specialist will suggest ways to improve your profile, so you may become eligible in the future. Within 10 minutes, you’ll usually know if you’re ready for a mortgage. The interview is also a great chance to get acquainted with your specialist, who will play an important role in your becoming a homeowner. Good communication with your will increase your chances of a successful and speedy process!

    Processing a mortgage involves gathering documents to verify information. Forbes has an excellent article on assembling all of the documentation that you may need which may include (but is not limited to) W-2 forms, two-weeks of pay stubs, credit reports, and bank statements. After your approval, you’ll receive a pre-qualification that includes a checklist specific to your file. This checklist will itemize all of the things you must submit before receiving a commitment.

    The closing is the “end of the line” in obtaining a mortgage. At the closing, you will sign all of the required mortgage documents. If it’s a new mortgage, you’ll collect your new keys and then take possession of your new home. If it’s a refinance, you’ll immediately start to enjoy the benefits of a new interest rate, cash out, or both!

    Current Interest Rates on Home Loans, Savings, Car loans – CD Rates, compare mortgage lenders.#Compare #mortgage #lenders

    Today’s Interest Rates and Financial Advice:

    Compare mortgage lenders

    Financial Advice

    Would you like to buy a home but worry that you’d never qualify for a mortgage? It’s time to stop guessing and evaluate your chances to land a loan based on everything from how much you make to your credit score. Believe it or not, the odds are in your favor.

    November 14th 2017

    The average cost of financing a new or used car or truck has stayed low over the past year, making auto loans a bargain by any historical measure. And buyers with reasonably good credit can always take advantage of the discount loans automakers are offering on many models.

    November 13th 2017

    Lending money to your child is risky business. But if you can avoid the personal pitfalls and convince the federal government that this is really a loan, and not a gift, the Bank of Mom and Dad can be a financial boon for everyone in the family.

    November 13th 2017

    Here’s how to make all of the right decisions so that you’ll save more, invest wisely and take full advantage of all the tax breaks to build your retirement nest egg.

    November 10th 2017

    It’s not enough to find a good location at an affordable price. Condo buyers must consider lots of extra costs, from association fees and special assessments to how well the building is maintained and how strictly it enforces rules on everything from noise to pets.

    November 10th 2017

    You’ve scouted out the best mortgage rate and fought hard to get the best price on your new home. But your bargaining shouldn’t stop there. Here’s how you can save on everything from settlement fees to title insurance.

    November 8th 2017

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    Interest ing Snapshot

    Individual retirement accounts, or IRAs, are a great way to build financial security for you and your family. They’re easy to open and our simple strategy helps you make all the right decisions now, and in the years ahead.

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    Compare mortgage lenders

    The Best Michigan First Time Home Buyer Programs For 2017, first time mortgage.#First #time #mortgage

    Michigan First Time Home Buyer

    First time mortgageAs a first time home buyer in Michigan, it’s incredibly important for you to understand how the home buying process works. On top of understanding the process, you’ll also need to become familiar with your financing options to determine which home buying program is best for you. A good mortgage lender will be able to thoroughly explain your financing options and help you choose the program that best suits your specific home buying needs.

    Buying your first home can be very exciting but it can also turn into a nightmare scenario within an instant. The main catalyst for this nightmare scenario is not getting an accurate estimate on the costs associated with the mortgage financing. Most loan programs will require some form of down payment but even if a down payment isn’t required, you will still have costs associated with the mortgage. Depending on the property being purchased, these costs can total thousands of dollars.

    Unfortunately, a lot of lenders use estimates for common costs like property taxes, homeowners insurance, and tax prorations. These estimates can be off by thousands and can cause two potential problem scenarios. The first being if the lender estimates the costs too high and you don’t have enough verified funds to close. This will get you a denial letter and prevent you from buying the home you want for no good reason other then the lender being lazy and using estimates to do bad math.

    The second scenario is if the lender estimates too low causing you to bring more money to close than you anticipated. This scenario is more common and can really make things hard on a first time buyer. The worst part about this second scenario is that you don’t really find out if your lender used estimates until maybe a week before closing. Imagine finding out four days prior to buying your home that you need an additional $1,000 or $2,000 dollars to close. This causes a lot of unnecessary stress about where you’re going to get the extra money needed to buy your home.

    Both of these scenarios can be avoided by working with, and getting pre-approved by, a good reputable mortgage lender. Fortunately, if you’re reading this, you’ve found one in Michigan Mortgage Solutions as we’ve been providing help for first time home buyers in Michigan since 1998. If you’d like to get pre-approved the right way and avoid the two scenarios above, call (248) 674-6450 right now or simply click here. Also, for more information on first time home buyer programs in Michigan, see below.

    Michigan First Time Home Buyer Programs

    There are several great mortgage programs for the first time home buyer and each one has it’s own unique features. I’ve laid out the fundamentals of each program below as well as informational links to each program’s specific guidelines.

    Pre-Qualification vs, mortgage preapproval.#Mortgage #preapproval

    Pre-Qualification vs. Pre-Approval

    Mortgage preapproval

    Mortgage Q A: Pre-Qualification vs. Pre-Approval

    When you initially set out to purchase a new home, the real estate agent(s) and home seller will want to know you can actually afford the thing. Heck, you ll want to know too.

    After all, if you can t afford to buy it, you ll be wasting everyone s time. Aside from affordability concerns, you may find other issues that disqualify you from obtaining a mortgage (do I qualify for a mortgage?).

    Agents and home sellers will also want to know that you re committed to buying a home, as opposed to those just casually browsing.

    For these reasons, most real estate agents will demand that you get pre-approved before they even begin showing you prospective properties. Most agents have a mortgage contact they ll likely refer to you to get the ball rolling.

    Tip: You can use this contact for your pre-qualification and pre-approval needs, but don t forget to shop around with other banks and brokers as well to ensure you obtain the lowest mortgage rate possible!

    What Is a Pre-Qualification?

    If you choose to finance the home purchase with a mortgage, you ll need to get pre-qualified first. A “pre-qualification” isn t as robust as a pre-approval, but it s a good first step to ensure you can purchase the home you desire (or any one at all).

    A pre-qualification is a pretty straightforward, simple check to see what you can afford based on your income/debt levels (debt-to-income ratio), assets, down payment, employment history, perceived credit score, and so on.

    You can get pre-qualified very quickly and easily with a bank or mortgage broker, but it won t carry much weight in the eyes of the agent or the seller.

    After all, with a pre-qualification you re simply supplying estimates and your credit report probably hasn t yet been run (though it should be pulled early on in the process). That said, a pre-qualification, or pre-qual, is just a determination of what you d likely qualify for if you made an offer and applied for a home loan.

    It s not necessarily a waste of time, but it s not going to get you very far. You can liken it to running a few numbers to see where you stand, but it cannot be used in place of a pre-approval.

    What Is a Pre-Approval?

    A pre-approval, on the other hand, actually has legs. It s a written, conditional commitment from a bank or mortgage lender that says you are pre-approved for the mortgage financing in question.

    It comes only after filling out a loan application, supplying verified income, asset, and employment documentation (assuming these items are necessary), running credit, and underwriting the loan file.

    Acquiring a pre-approval shows the interested parties (sellers, agents) that you re a committed buyer, boosting your chances of sealing the deal at the price you want. It will also show you how much house you can afford, not just an estimate.

    How Long Is a Mortgage Pre-Approval Good For?

    Once you provide all the required documentation and get the mortgage pre-approval letter from a bank or lender, it is typically valid for 60-90 days. Just note that a lot of things can change during that time, such as your credit score, so it s not 100% guaranteed.

    Again, a pre-approval is not a guarantee that you will be approved for a mortgage. Otherwise it would just be an approval. And even an approval is still conditional on you meeting a series of requirements set forth by the lender.

    If things do change dramatically, or even a little bit, it won t matter if the pre-approval is just a few days old, as material changes can affect the outcome of your approval.

    For example, if your credit score falls below a key threshold, like from 620 to 618, you could be denied after getting your pre-approval letter. It s not the bank s fault either, it s just an unfortunate turn of events.

    Same goes for anything the underwriter sniffs out during the approval process. They get a lot more involved and may find things that were initially missed.

    When it comes down to it, an approval is never a sure thing until the mortgage is funded and closed!

    As you can see, being pre-approved and pre-qualified are not the same thing, so make sure you know the difference before shopping for a home.

    Do You Need a Pre-Approval Letter to Make an Offer?

    At the end of the day, you don t necessarily NEED a pre-approval letter to make an offer on a piece of property. But nowadays, with so few properties on the market, and so many multiple-bid situations, it s often a requirement just to hear back from the seller s agent.

    Sure, you can tell your real estate agent to tell the listing agent that you ve got an 800 credit score, $1 million in the bank, and a job that pays you $500,00 a year. And they might say fine, skip the pre-approval.

    But chances are that s not your financial profile, so just to play ball and keep everyone happy, it often makes sense to get the pre-approval done. It will also strengthen your offer.

    And as I alluded to earlier in this post, it s good to know where you stand as well. You might think you re a sure shot at getting a mortgage, but surprises aren t all that uncommon and mortgage guidelines change all the time.

    So a pre-approval could actually save you time and money, despite being a task that needs to be taken care of upfront. It shouldn t take very much work to get one anyway.

    There are brokers and lenders that can get you one the same day, or even within a few hours, thanks to new technologies that are able to automatically verify things like your credit scores, employment, income, and assets.

    Just remember not to feel obligated to use the bank that furnishes the pre-approval letter for you! It s entirely possible to go elsewhere, and even use the letter to get a better offer from a different lender.

    Next Step After Pre-Approval

    The next step after receiving a mortgage pre-approval is to either apply with the lender who provided it or apply for the loan elsewhere. You can certainly shop around and decide which company is the best fit.

    Once you ve selected a lender, you ll need to sign disclosures and express your intent to proceed with the loan application. The lender will then begin collecting paperwork and signatures, including the purchase contract, in order to process the loan.

    It will eventually land on an underwriter s desk for full approval, at which point a list of conditions will be generated (if applicable) in order to fund the loan.

    You will also be given an opportunity to lock your loan early on so the interest rate you are quoted won t change.

    To summarize, the difference between a pre-qualification letter and a pre-approval letter (for you lazy readers):

    • First step
    • Less robust
    • Based on estimates
    • Doesn t require a credit pull
    • Carries less weight/ not a sure thing
    • Not taken seriously
    • Based on verified information
    • Must complete an actual loan application
    • Requires a credit pull
    • Must be underwritten (manual or automated)
    • Written conditional commitment
    • Shows sellers/real estate agents you re serious