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Many lenders pre-qualify or pre-approve mortgage applicants, which can help considerably in the buying process. While the terms are often used interchangeably, there are some important differences to note.

In general, pre-qualification is considered an initial step in which the applicant provides information on income, assets and debts. The lender may or may not require documentation.

Pre-approval is considered the next step and requires documentation and a credit check. A hard credit inquiry can affect your credit score, and several by different lenders in a short period of time can cause your score to take a significant hit. If you’re thinking about getting pre-qualified or pre-approved for a mortgage, ask if the company will perform a hard credit inquiry and decide if you are willing to risk the potential impact on your score.

Reasons to Get Pre-Qualified or Pre-Approved
Getting pre-qualified or pre-approved for a mortgage before you begin house hunting can help you throughout the whole process. It can save you time and can help you avoid frustration and disappointment later. This is because you can start your search with a reasonable estimate of how much you will be able to borrow. That means you can focus on houses in your price range, rather than falling in love with a house and then finding out that a lender will not loan you enough money to buy it.

If you have found the house of your dreams and want to make an offer, you need to show the owners that you are serious. That means you need to be able to demonstrate that you’re able to qualify for the mortgage you need to buy the house.

Some homeowners may only be willing to sell to buyers who’ve been pre-approved for a mortgage, while others may be willing to accept an offer from buyers who’ve been pre-qualified. In some areas, one is more widely accepted than the other. Ask your real estate agent whether being pre-qualified or pre-approved is more likely to help your chances of having your offer accepted.

Obtaining a Mortgage
Being pre-qualified or pre-approved does not necessarily mean that you’ll be approved for a mortgage by that lender. The company may require additional documentation to process your mortgage application and may learn more facts that influence their decision. Getting pre-qualified or pre-approved by a particular company does not mean that you’re obligated to obtain a mortgage from that lender. You can and should shop around for the best terms.

 

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Many homebuyers need help from friends and family to qualify for a home loan through co-signing. Of home purchase loans in the U.S. during the second quarter of 2017, 22.8 percent included a co-signer, up from 21.3 percent in the second quarter of 2016—according to a study by Attom Data Solutions, a property database in Irvine, Calif.

Here’s what you need to know before co-signing a mortgage:
Payments Are Now Your Responsibility
You’re now 100 percent responsible for someone else’s obligation. While you probably won’t be making a monthly payment on the house, as a co-signer you’re now just as responsible for repaying the obligation as the homebuyer is.
Your offer to help by using your income and good credit score as qualifying factors extends to paying the mortgage if they don’t make payments.

Your Future Credit is Affected
A co-signer is, in essence, lending their future credit worthiness for someone else’s current mortgage obligation. If the person you’re co-signing for loses their job and can’t make house payments, then their credit report will be hurt, and so will yours.

The delinquency will appear on your credit report too, as does the obligation to pay the mortgage bill on time each month. This could hurt your ability to get credit in the future if you apply for a home, auto, personal, business or student loan, or want to get a good rate on a credit card.

Even if the mortgage payments are made on time and in full each month, being a co-signer on the mortgage can count against you when qualifying for future loans. That large loan is still a risk that you’re obligated to pay, and could threaten your credit score.

Your Debts Will Be Looked At
A co-signer’s debts will be considered in approving the home loan, with the expected outcome that debt and income from two borrowers will lower the debt-to-income ratio, or DTI, for the home loan.

For conforming loans, Fannie Mae and Freddie Mac will allow a “blended ratio” DTI that combines the incomes of the occupant and non-occupant co-borrowers. This can help when the co-signer isn’t going to live in the house and has most of the income, such as for parents helping their child buy a home.
As a co-signer, you should be prepared to provide paperwork for all of the same credit requirements that the borrower is subject to, such as bank statements and income tax returns.

 

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When you move into a new home, you want to make a good impression on your neighbors. After all, these are people who you will probably know for years and years, and chances are many will turn into life-long friends or at the very least, acquaintances you will see at community parties or events who you can share a few kind words with.

Depending on where you live, it’s not uncommon for your new neighbors to welcome you to the neighborhood during your first week or so in your new home with some freshly baked cookies, a bottle of wine or even a meal. If they do, be sure to follow-up with a thank you card and return any plates that may have been involved. Not doing so could leave a bad impression or your neighbors may think you’re not very friendly.

You’re not expected to make a return gesture quickly, but once you settle in, invite some of your neighbors over for a small “happy hour” or weekend barbeque, and just get to know them a little better. This was show people you are looking to be neighborly.

If you have a party and don’t invite the neighbors, keep the noise to a minimum, and try to keep your guests from parking too close to other driveways and walking on other people’s lawns.

Moving in is a busy time, but don’t forget the responsibilities of owning your own home. Keep your lawn mowed, your sidewalks shoveled if it snows and don’t leave your garbage cans out by the curb all week. These are all things that could leave an unfavorable impression on your neighbors.

If you have a dog, and he’s a heavy barker, make sure that he’s not in a place where your neighbors can hear him. Nothing sets off a neighborhood feud more than a dog that keeps someone up all night. Additionally, clean up after a walk and keep the dog from running free on the lawns next door.

Some neighborhoods frown on keeping an old car parked on the road in front of a house, so if you have an ancient wreck, put it in the garage or leave it in the driveway. Same with a boat or trailer.

Even if you have lots of friends, becoming friendly with your neighbors is a good idea. They can keep an eye on your property when you are away, sign for packages, tell you about community happenings and just be a great sounding board after a long day at work. So, say hello when you move in and start establishing some great friendships.

Interested in more real estate tips? Feel free to contact me directly!  Jack McSweeney – REMAX Estate Properties – DRE#01027223

 

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