Buying a new home, first home or investment property can be an exhilarating and engaging experience. However, navigating the home-buying market can be overwhelming. To get the most out of your home-buying experience, it is important to have a Buyer Agent on your side, to represent your interests. Remember, sellers have agents to represent their interests, so make sure you do, too.
Ask Maggie to be your Buyer Agent, or to locate the the best agent for you, so you have the real estate edge.
There are many reasons to want to own a home or investment property, and there is much to understand before you make the commitment. Understanding the process is a really important component, and hopefully, the Q & A below will be helpful. The questions posted change frequently, so check back often to continue the learning experience.
Here's a good question, recently received, that can be your first step in determining if you are ready to buy.
Q: What is a pre-approval and why do I need it?
Jeanne, Needham, Ma.
A. A pre-approval is the result of a preliminary financial examination by a bank or other lending institution (mortgage company) to determine your potential ability to qualify for a mortgage. This process is not an application for a loan, and it does not mean you must do business with this particular institution when you are ready to apply for a mortgage. However, that said, it can be the beginning of building a relationship with a mortgage broker.
The result of a successful pre-approval process is a "pre-approval letter", from the institution, stating you have gone through the preliminary process and are a good canditate for a mortgage, based on this preliminary information. Having a pre-approval, though, does not necessarily assure, in the end, you will actually be able to obtain a mortgage. Some buyers prefer to apply for a mortgage instead of seeking a pre-approval, to assure they are truly qualified. All of these steps can, and should be taken, prior to identifying a property.
When looking to obtain a pre-approval, the process is quite simple.
Once you have located a mortgage broker to speak with, they will ask you a series of questions that you should know off the top of your head or by looking at your bank statements, pay stubs, tax forms, etc. Generally, the information you provide will be put into an "underwriting program" and that, combined with a credit check, will result in a pre-approval letter or the denial of a pre-approval. Usually, a pre-approval conversation can happen over the phone and it will take about 20 minutes. Most institutions are able to provide a letter of pre-approval within 24 hours.
Now you know what a pre-approval is and how to go about getting one. The reasons you need a pre-approval are two-fold. First, you want to know, realistically, how much you can afford to spend for a home on a monthly basis. Secondly, any offer to purchase you will submit should be accompanied by a pre-approval to assure the seller you are a qualified candidate. In other words, you want to know you can buy, and so does the seller of the property you hope to buy.
For further information on this topic, or any other real estate topic, Ask Maggie.
Ask Maggie Collaborative Realty
1501 Beacon Street, Suite 1103, Brookline, Ma. 02446