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Important Things to Know to Get a Mortgage Pre-Approval

Sep 10, 2018

Getting a mortgage pre-approval can give you a guarantee that you can get the loan you applied for. Factors like the sales price of the home you are looking to buy, your income history, credit score, monthly debt load will influence the amount of loan that a lender can pre-approve. The specific amount of money to get a pre-approval will vary among situations and loan requirements.

Getting a Pre-Approval

With a pre-approval, you can have the confidence to approach a real estate agent or a property seller as a qualified possible buyer. In general, lenders will give a no-cost screening when determining whether or not you meet their basic lending conditions. They will look at your pay stub or W-2 form to confirm your eligibility for different programs after they do a credit check. In case they grant a pre-approval, you will get a written documentation which reflects the maximum amount of money you are qualified to borrow and the approximate mortgage interest rate. Keep in mind that pre-approval letters are subject to different underwriting conditions.

Costs Involved to Get a Pre-Approval

To make sure you get a mortgage pre-approval, you may need to spend your own money on the following:

  • Down payment. Some loan programs will require you to provide a down payment. A pre-approval letter will contain the required down payment percentage. For example, if you are eligible for a 90% loan-to-value program, your lender will give you a loan to cover the 90% of the purchase price and you will shoulder the rest. You will be requested to give copies of your bank statements to verify you have money available for the down payment.
  • Closing costs. A pre-approval letter will tell you if you have to spend money for closing costs which can include items like attorney fees, lending fees, report fees, appraisal fees, and taxes. Some loan programs may require the seller to pay a certain percentage of the closing costs. If the seller doesn’t pay, you will have to pay the full closing costs.

Approving your Loan

After the lender verifies your pre-approval conditions, they may issue a loan commitment or final loan approval. Your current earnings, source of your down payment, tax records for many years and others will be reviewed by an underwriter. Visit your chosen lender and approach a loan officer to have a discussion on the amount of money you will have to prepare to get a mortgage pre-approval.

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Five Important Things to Keep in Mind before Taking out a Reverse Mortgage Loan

Sep 6, 2018

Taking out any kind of home loan is a major decision to make. You will have to take time and effort to make an informed decision. If you are looking to take out a reverse mortgage loan, there are some things you should know before you decide to apply for it. You can qualify for this loan if you are at least 62 years old. With this loan, you can access your home equity without giving up your home’s title. This loan doesn’t require you to repay the loan amount but rather lets you stay in your house until you choose to sell it in the future. The loan amount will then be deducted from the future sale. Before taking out this kind of loan, make sure you know the following:

Expect to Have an Increasing Balance

With this kind of loan, you won’t be tendering any payments toward your loan during your lifetime. This results in the balance increasing while it incurs interests. Over time, this balance can grow; however, you can pay this off when your home is sold after you die.

You Will Have to Pay for the Closing Costs

Often, a reverse loan can involve paying for a mortgage insurance premium, origination fees, and others. However, such fees can vary between lenders. That is why you must inquire from various lenders to know their fees and choose the one that suits your situation.

Interest Options are Available for You

Banking institutions set interest rates but this mortgage can have a variable or fixed interest rate. Ensure you know the rate that suits you in the long run. Lenders have varying interest options, so make the right choice. Also, keep in mind that your interest cannot be deducted from your taxes since the mortgage is a loan not a source of income. But, you don’t make any payments every month either.

The Loan Only Requires you to Repay your Home’s Value

Although you can often borrow most of your existing equity, only your home’s value is repaid afterward. This option is in place so you don’t pass your debt to your family members or heirs in the future.

You Need to Look for a Specialty Lender

With many lenders to pick from, you must think about a lender that specializes in this kind of loan. Refinancing a house is not a minor decision. Make sure you fully understand all the things involved and that you have full trust in your lender before you move forward.

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