Pre-Qualification vs. Pre-Approval: What’s the Difference?
If you are starting the home buying process, you may have heard that you need to get pre-qualified or pre-approved. Although many people use these terms interchangeably, there are very important differences between the two terms that every homebuyer should understand.
Pre-qualification is seen as the first step in the mortgage process, and is usually done over the phone or online with a Loan Originator. You provide the lender with an overall financial picture, including your debt, income, and assets. The lender reviews everything and gives you an estimate of how much you can expect to borrow. Pre-qualification is based solely on the information you provide to the lender and can give you a starting point for your homebuying search.
A pre-approval can be done first or as a next step after pre-qualification. It requires the borrower to complete an official mortgage application and supply all the necessary documentation to perform an extensive check on your financial history and current credit rating. During the pre-approval process, you will discuss product and rate options because this is often based, in part, on your credit score. You may even lock in an interest rate. You will receive a conditional commitment in writing for an exact loan amount, allowing you to look for a home at or below that price level. Pre-approval puts you at advantage when you are negotiating with a seller because they know you are one step closer to being able to afford their home.
The advantage of completing both steps before you begin house hunting is that you will have a good idea in advance of how much you can afford. You won’t waste time with guessing or looking at properties that are beyond you means. The pre-approval also enables you to move quickly when you find the perfect home, because the seller knows that your offer is serious, especially in a competitive market.
Tips and Tricks for First Time Homebuyers
- Start with a realtor that you trust. You might be spending a lot of time with this person. Make sure it’s a good fit.
- Get Pre-approved or at the very least pre-qualified. Make sure you know how much house you can afford BEFORE you start looking. Shopping for anything without a budget will only set you up for failure and disappointment.
- Know your deal breakers. It’s important to know your WANTS vs. your NEEDS and to remind yourself of them while you’re looking for houses.
- Take pictures! Start each photo with a picture of the house flyer with the address. You’ll thank yourself later. This will make life MUCH easier when you’re going back and looking at them. Also, make sure to take pictures of the home’s greatest strengths, but also any issues you see.
- Take notes! Keeping your thoughts organized about each home you view is key. Make sure to take notes as you go, or immediately after viewing EACH home you see. You won’t remember everything when you get home so this will be key when reevaluating the homes you’ve seen.
- Don’t just focus on the home. it’s easy to get caught up with the new white kitchen or beautiful hardwood floors, but you need to be careful. Make sure to take note the area surrounding the home. Will your commute to work be easy? Does the neighborhood meet my needs? (If you’re starting a family, a quiet street might be preferred over a busy one). Swapping out countertops or backsplash is relatively easy. Picking up the entire house and moving it to a more preferred neighborhood… not so much.
- Lastly, trust your gut. For some people, it might take viewing 20 homes to finally find the right one. But, for others, it might be the first or second home you visit. If you’re confident that you’ve found the right home, embrace that feeling.
Homestead Funding would like to welcome David Bengle to our Glens Falls, NY sales team.
David’s Loan Originator philosophy is that every borrower’s experience should be as thorough and seamless as possible. He prides himself on being able to deliver the absolute best service to each and every client. He does this by maintaining consistent and clear communication, being proactive, and providing his borrowers with information about the best loan products to fit their specific needs. David says, “what’s great about working for Homestead is that they offer so many different loan products, and the streamlined process makes the experience simple and enjoyable.”
What David loves most about being a loan originator is his interactions with his clients. Strong communication skills are imperative, and he enjoys getting to know his borrowers and building those relationships for years to come.
David has nearly two decades of experience in the industry, so he’s seen it all, and he’s able to give his clients honest and accurate information. As a passionate family man, he knows how important buying a home is for your family, and he wants to make that experience as enjoyable as possible.
If you’re looking for a loan originator who truly cares about the individuals and families he works for and has the knowledge to really help - then please give David a call!
There are few people you can learn better from than the ones who have been there/done that...
There are few people you can learn better from than those who have been there and done that. In her Forbes article outlining her first-time home buying experience, Julia Dellitt names a few things she did not expect during the process.
Dellitt and her family were living in an apartment, finally ready to make the big move. So, they did their homework — checking their credit, getting pre-approved for a loan, finding a Realtor they wanted to work with, and doing the rounds at open houses on weekends. On that first weekend, they made an offer, only to find the experience not quite as simple as it had looked on HGTV.
While they eventually found just the right house, here are a few things she says they learned. A big one was not even a consideration at the beginning of their house hunting expedition — transition. Because they were renters and started looking for a home about three months before the lease on their apartment ended, they assumed they’d have plenty of time to find something, and if that were not the case, they could rent month-to-month. Instead, the exact opposite happened. They ended up having to cover both their new mortgage and previous rent for a month. According to many real estate experts, this is something home buyers see as a worst-case scenario, so they don’t plan for it. Having some extra contingency funds for expenses that are more than anticipated (movers, closing costs, extra taxes, etc.) helps you avoid unnecessary financial headaches on top of such a significant investment.
It’s easy to chuckle at picky home shoppers when watching real estate reality TV shows, but when you see properties in real life, you can surprise yourself — becoming one of the very people you criticize when watching those shows. Dellitt advises would-be home buyers to stop sweating about the small stuff that can be easily fixed like ugly wallpaper, old vinyl floors or melamine counter tops, reassuring them that so much can be changed or fixed along the way.
Another thing rookie home buyers tend not to focus on is how their wish list may be unrealistic within their own budget. If you want an attached garage, a fenced-in backyard, and a downtown location, there is a point at which you may find those three things are incompatible. In the end, Dellitt and her family found a home in a quiet cul-de-sac with everything they wanted, but it was about ten minutes from the downtown area — not their original plan.
Her final warnings involve how unexpected paperwork can show up in your mailbox a while after your move — things like a request for a title abstract, or perhaps supplemental property tax bills, etc. And then there was the inspection that had been performed. She speaks of deferred maintenance items she knows she and her husband will no doubt have to address in the future — some small fixes and others will take a bit of budgeting. For the items that needed immediate attention, they negotiated with the seller and got bids from contractors.
Is the drama worth it? “Despite almost losing our home of choice, I’m so glad we stuck to our guns,” says Dellitt. She encourages first-time buyers to ask questions, even if they sound like dumb ones. Don’t get hung up on how much you don’t know. “These feelings popped up big-time during the house-hunting process, especially when I blasted our Realtor with ten questions a day via text and email. But you know what? Good real estate agents want you to feel equipped and informed...”
Source: Forbes, TBWS
Pea Pappardelle Pasta is a healthy spring time dish for you and your family to enjoy. This dish has a delicious flavor and makes for a nice and light lunch.
- 8 oz dried uncooked egg pappardelle pasta
- 6 oz fresh sugar snap peas
- 1 cup shelled green peas
- ¾ cup pea shoots
- 3 tbsp extra-virgin olive oil
- 1 tbsp lemon juice
- 1 tbsp grated lemon rind
- 1/8 tsp crushed red pepper
- ½ tsp kosher salt
- ½ tsp black pepper
- 2½ oz ricotta salata
- 2 tbsp chopped fresh basil
Serving Size: 4
Fill a large pot with water. Set stove to high and bring water to a boil. Add the snap peas to the pot and cook until they are a bright green (about 1 minute). Fill a bowl with ice water and put in the snap peas. Let them sit. With the remaining boiled water, cook pasta for 4 minutes or until al dente. Add the green peas for the last 30 seconds. Drain and cool for 5 minutes. Drain the snap peas and cut them in half diagonally.
In a separate large bowl, combine the lemon rind, juice, salt, black pepper, crushed red pepper, and olive oil. Stir mixture with a metal whisk.
Add pasta, pea shoots, and snap peas to the mixture. Toss to coat. Plate the pasta and top with the cheese and basil.