mortgage lenders Archives - Maura Allard Realtor

When it comes to purchasing a home, a mortgage pre-approval is often the first step in your process. It is nearly impossible to begin your home search without understanding the amount of money you qualify for. No matter the type of loan you decide to use, from VA to conventional or FHA, all mortgage lenders can (and should!) provide you with a pre-approval to use as the basis in your home purchase search. With this in hand, you can confidently work with a realtor to scope out and secure the home of your dreams.

A mortgage pre-approval dictates your purchasing power.

In short, a mortgage pre-approval is an official letter that you receive from a lender that advises the max amount of money you can borrow for the purchase of a home. It shows realtors and sellers that you have been vetted and are pre-approved for a home loan. This provides security for all parties involved. Most lenders use the terms, “preapproval” and “prequalification” interchangeably when it comes to a borrower’s purchasing power, but there may be a slight difference that you want to look into. Typically, pre-approvals require a more in-depth review of a borrower’s credit history and financial health. With prequalifications, some lenders don’t require a full credit review prior to providing you with their prequalification letter. It is best practice to stick to one that reviews your financial health to set you up for the best home purchase success once you decide on a home to put an offer in on.

Mortgage pre-approvals require personal information.

In order for lenders to make a reasonable decision on your pre-approval request, personal information must be provided and reviewed securely by your lending institution.

Some of the most standard and requested information includes:

Credit history
Proof of income
W2’s for the last two to three years
Pay stubs
A copy of your identification (license or state ID card)
Bank statements
Social security card
Asset list
Debts to determine your debt to income ratio

Pre-approvals are not indefinite in their timeframe.

Although pre-approvals are the best way to secure your stance in the real estate market as a buyer, they don’t last forever. Going into the purchasing process knowing what you want in a home is important to beginning the search, even prior to your pre-approval receipt. Once you decide on purchasing a home sit down and make a checklist of what you need prior to seeking outside assistance from a lender and realtor. Include a pre-approval on your list of must-haves along with your dream home needs. Remember that it’s also important to have all documentation ready to go prior to meeting with your lender. This keeps things moving and keeps everyone involved more organized. As you search for your home, be concise in your decisions while keeping your pre-approval letter in mind. Typically, pre-approval letters are good for 60 to 90 days from issuance, but it varies by state. Check with your lender to ensure the exact timeframe on your pre-approval and request what additional steps need to be taken if you go past that timeframe without securing a home.

There are many factors to consider when deciding to purchase a home. Whether it’s your first home or your tenth, a mortgage pre-approval is key to your leverage and security in the purchasing process. If you think now is the time for you to buy the home of your dreams, let’s work together and start your pre-approval process and home buying checklist today.

Buying a home for the first time can be exciting… and overwhelming. Especially when you see homes being purchased at a median cost of $426,000 in Massachusetts and flying off the market as soon as you can find them.

With these current real estate trends, it’s understandable that you may find yourself tempted to impulse buy the first home you find – one doesn’t check all your boxes and worse, one that could hurt your financial goals and keep you locked into a mortgage well into retirement.

Nobody wants this. You don’t want this and I don’t want this for you! Trust me when I say it’s worth the patience and doing things the right way. The right way meaning buying a home that you love, of course, and one that doesn’t break the bank.

I know what you’re thinking… “Yeah, that’s all well and wonderful, Maura; but where do I even start?”

That is possibly the best question you could ask a top-performing Keller Williams Realtor in Massachusetts. I know exactly how to get you through this trying time and I’d be happy to help you. First, let’s start with my top 10-tips that I’ve assembled to help first-time homebuyers tackle the home-buying process. Buying a home should be a blessing, not a burden – so let’s walk through these tips together.

Top Ten Tips for First-Time Home Buyers

Pay off all debts & set aside some emergency cash.

Owning a home is EXPENSIVE. Once you purchase your dream abode, you become responsible for SO many things. Broken faucets, leaky shower drains, frozen pipes… the possibilities are endless when it comes to maintaining a home and the costs can and will add up. So, before even thinking about buying your first home, wipe your slate clean and pay off all of your debts and prepare an emergency fund for up to 6 months of expenses.

2. Determine just How Much House you Can Afford

Budget, Budget, Budget. It’s easy to fall in love with a massive beauty but can you afford the massive mortgage payment attached to it? You need to budget accordingly and leave room for other necessities (including HOA fees, taxes, insurance, etc.)

For example, let’s say you bring home $5,000 a month. Multiply that by 25% to establish your maximum monthly house payment of $1,250. Based on a 15-year mortgage with a 4% fixed interest rate, here are the home options you can afford (not including taxes and insurance)…

Let’s do some math:

$187,767 home with a 10% down payment ($18,777)
$211,238 home with a 20% down payment ($42,248)
$241,415 home with a 30% down payment ($72,424)
$281,650 home with a 40% down payment ($112,660)

That’s an easy way to find a number in your ballpark. But don’t forget that property taxes and homeowner’s insurance will affect your monthly payment. You’ll also need to factor those numbers in before settling on a maximum home price.

If you use the above example and enter $211,238 into this handy mortgage calculator, you’ll find that your maximum monthly payment of $1,250 increases to $1,515 when you add in $194 for taxes and $71 for insurance. To drop that number back down to your monthly housing budget of $1,250, you’ll have to lower the price of the house you can afford to $172,600.

Since property tax rates and the cost of homeowner’s insurance vary, check with your real estate agent and insurance company for estimates to calculate how much house you can afford.

3. Continue to Save up for that Down Payment

Rule of thumb? 20% (or more) of the total house price is recommended as a down payment on a home purchase.

4. Save for Closing Costs

Remember when I said maintaining a home was expensive? I meant to say buying one was as well. Along with your down payment, you are going to need to set aside money to pay for closing costs. On average, closing costs are about 3-4% of the purchase price of your new home. Your mortgage lender will give you a total number so you know what to bring with you on closing day. You may be wondering what this fee covers. It covers:

Appraisal
Home Inspection
Credit Report
Attorney
Homeowner’s Insurance

5. Get Preapproved

Did you go ahead and clear your debts, stay debt-free, and save your money the down payment as well as the closing costs? YES! Then you are ready to go ahead and start your application for a loan. I happen to know the best loan originator around if you are looking.

Stephen J. Lewis

Licensed Mortgage Originator

Branch Manager

c. 781-706-1145

o. 978-750-1080 x.11

e. [email protected]

Preapproval is important because it shows sellers that you’re a serious buyer which is a great way for a buyer to stay ahead in a competitive market.

6. Find a Home for Sale in your Price Range

This is the FUN part. According to recent data reported by the National Association of Realtors (NAR), most buyers either found the home they purchased online (50%) or through a real estate agent (28%). Doing both sets you up for success! You can find your dream home simply by looking through my listings or contacting me to do the search for you.

7. Research Neighborhoods

Finding the perfect home is important but don’t choose a home based on the property alone. The quality and location of the neighborhood need to be a factor in your decision. Ask your real estate agent for information on crime rates and the quality of schools around your prospective neighborhoods. Calculate your new commute times to see if they seem manageable. Visit the neighborhood at different times and days to check for traffic conditions and noise levels and to see if people are comfortable being outdoors. Only choose a neighborhood that you and your family feel good about.

8. Attend Open Houses

Once you’ve narrowed down which neighborhoods you like the most, visit open houses of homes you weren’t even considering. Why? It’s a great way to learn about where you want to live – maybe meet the people you want to eventually live beside and call your neighbors; become acquainted with the area. The house may not be your dream home, but when do eventually find the house you love, you’ll know because you’ll have something to compare it to.

9. Make an Offer

You’ve found your HOME. You’re already preapproved which is GREAT and you want to make an offer. But, how much should you offer? This is where you can rely on an experienced Keller Williams Agent, like myself, to use my expertise and guide you through buying a home for the first time. It’s important to make sure your offer is competitive but well within your budget and the home’s value. Don’t be impulsive and offer a value higher than you can afford in an effort to subdue the competition. Sometimes, the simplest effort can win the prize.

PRO TIP. Writing a personalized letter to the seller of the home helps your offer stand out amongst multiple bids.

10. Prepare for Closing

Your offer has been accepted! It’s time to prepare for the average closing process of 43 days – which gives plenty of time to tackle a few items.

Appraisal
Home Inspection
Homeowner’s Insurance

Your realtor will schedule the few remaining steps, such as the inspection and final walkthrough and keep you updated every step of the way. As you prepare during this very exciting time, be sure to read every document. If you don’t understand something, ASK; especially before you sign an official contract.