Prequalifying For a Mortgage [mortgageloan-processor.blogspot.com]
In this video Chirag Shah from Gateway Realty talks about how to pre-qualify for a mortgage. What to know prior to speaking with a mortgage lender. Chirag also shares what questions to ask a lender.
mortgageloan-processor.blogspot.com Pre-Qualifying for a Mortgage
Prior to obtaining a mortgage, consumers generally seek to prequalify. This is the process of having a lender look at the consumer's credit profile, debt to income ratio, and from there make an educated guess about how much money the lender is willing to give to the consumer as a mortgage loan. This is usually done before the consumer ever even starts looking at homes. For the majority of home shoppers, this prequalification actually determines the price range of homes they will focus on with their buyers' agents. What is more, such a prequalification protects consumers from bidding for a house only to be disregarded because they lack a lender letter stating that this bidder is a serious contender and considered creditworthy by a lender.
Prospective home sellers want to see buyers who have already entered into discussion with a lender willing to write a mortgage loan for them.
This separates these consumers from others who might not be able to secure financing, and who may - while the buyer and seller are tied up in a transaction that will ultimately fall through - in the end be a costly mistake for the seller who sends other would-be buyers packing. While there are a number of mortgage calculators on the Internet, the only accurate means of discerning how much money a borrower can qualify for is through discussion with an actual lender. After all, even though the lending rules are fairly standard throughout the industry, different lenders offer different loans.Moreover, some lenders may not offer the kinds of loans a consumer might find more profitable and which, in the long run, might allow her or him to buy more house for the money. This is especially true for borrowers who would like to buy more home at the onset than they have money for in the long run, but - because of future business growth - anticipate being able to afford the actual house payments in the future.
Such loan products may include adjustable rate mortgages, balloon payments, and also low interest or interest only loans that for brief periods of time offer a set of payments easy on the pocketbook. In some cases there are even alternative means of financing that only lenders truly know about and can set up for their clients.Prequalifying with a lender is quick and easy. Rather than submitting a whole loan application, the would-be borrower simply needs to disclose assets, liabilities, monthly payments, income from all sources, and consent to having a credit report pulled. The lender will evaluate these figures and based on the debt to income ratio and also the underwriting standards germane to that particular financial institution offer a figure which presents the upper cap of the loan the bank is likely willing to offer. In some cases they might even go so far as to calculate the interest rate the consumer might have to pay for the loan, which further influences the buying decision of future homebuyers who are ready to make the largest investment in their lives.
Find More Prequalifying For a Mortgage ArticlesQuestion by toolate: after we pay off debt whats the shortest time we should wait to prequalify for a mortgage? we already got approved for a 270,000 but the broker said because of our score we DID qualify for the government loan BUT the payment will be over 2000. i didnt ask him but if we paid our debt off next week (ill be running into owed money) then how long should we wait before we apply? we were hoping to try and get a mortgage that would be between 1800-1950 nothing more. ALSO do all brokers try the same loans, in other owrds should we try a different broker or its not the broker its ONLY our score? How do brokers work? with all the same companies or different ones? Best answer for after we pay off debt whats the shortest time we should wait to prequalify for a mortgage?:
Answer by Ronald T
Try going to this site, they have lots of information about this sort of stuff.
Answer by P J
If the payments are too much you are buying outside you means find a less expensive house. Things happen with homeownership that cost money and if a payment alone puts you WAY over the edge you will lose the home. Right now if you have lousy credit it is very hard to sell the loan these days.
Answer by LadyB!รข„¢
It sounds like your broker is saying that becuase of your credit score -- you are in a higher interest rate category. Example if you have a 580 middle FICO your best rate may be 8.5% or if you have a 680 FICO your rate may be 6.5% -- This is what will determine the monthly payment. Your debt to income ratio will improve if you payoff your debts, this too may help to qualify you for more lenders and a lessed rate if you are currently at a 50% debt to income ratio and when paid you would be at let's say 36% you may qualify for additonal lending programs that have lower rates. The major impact of paying off your debts before qualifying for a mortgage will be your FICO score will rise a few points when the payments are recorded with the bureaus because your ratio of unused open credit will be greater, i.e. you have three credit cards with $ 3k limits and currently owe $ 2900. on each, this lowers your score. But if you have $ 3k available and have balances that are 25-50% of the available credit limit this increases your score. It shows restraint and responsible use of credit. All mortgage brokers are not created equally, but they are all generally motivated to earn their commission so will work hard to find you a loan if your situation is not too time consuming. When you apply for the loan you should wait until middle of the next month after you make your payments to your creditors, so it has an opportunity to show up on your credit file. Most credit companies report this info once a month at the beginning of the month. Hope this helps, best wishes.
Answer by valstpatrick
The broker should have supplied you with a Good Faith Estimate (GFE) and at the bottom of the page is your estimated monthly payment JUST for the mortgage. IF that figure is where you feel comfortable, then you are in the range you want. NOT all brokers are alike. Each broker decides what banks / lenders to work with. Some brokers are not FHA or VA qualified so they can not 'sell' or write that loan type. I always recommend a borrower to work with a lender or broker that they like AND trust. Most lenders are rate competitive and will be about the same rate - check your lender fees (broker fees) as well. Most mortgage programs are a combination of Credit, Collateral (Loan to Value) and Capacity (debt ratios). Your mortgage professional should be able to explain how you fall into a program and IF you can improve one area (in your case debt ratios) and if that will improve your Credit Scores. Your credit profile is updated ONCE per month. If you recently paid down debt, you either wait until the first week of the month and repull or PAY to have your profile updated and RESCORE - this is generally a cost the credit bureaus charge lenders and will be passed on to you. If you have the time, wait until next month. If your scores improve enough you may be qualified for a slightly better rate, less points or higher loan to value - or all. Depends on what program you are going with. IF your mortgage professional is NOT walking you through these steps, look for a more seasoned professional that will spend the time to inform you about your choices. A mortgage is a financial tool that 'manages' our biggest debt and our biggest asset - be informed about your choices. Know your options. Hope this helps and Good Luck =)
Answer by surfbum68m
There are different levels of licensing when it comes to brokers, in that there are lenders that won't approve certain types of brokers. Correspondent Lenders and Licensed Lenders will generally have more options. Rates are competitive from lender to lender so will fall about the same from broker to broker. With the mortgage market in the state it is currently in, it would be best to get a rate locked Right away with a broker you trust. Program guidelines are changing daily, in which case you could qualify today but not tomorrow, because the lender has dropped the program that you qualified under. With rates going up it may be time to suck it up, get whatever loan you can get, and take a few less trips through the drive thru (if you stopped going to Starbucks you could save some money, if you don't go already don't start). You can always refinance when the market corrects itself, and lower your payme nt then.
Answer by Casey C
Unless I can see your credit and financial situation, it's hard to tell why a broker would say you are approved and then say that you aren't approved... sounds like a bad broker. Even though most banks and brokers have access to the same mortgage programs, most of them are too lazy to educate themselves. My guess is that your guy quoted you information before he got a complete application or knew what he was doing. When in doubt find a new guy. I'd be more than happy to set you straight if you'd like to call or email me. casey.x.casperson@chase.com or caseycasperson.com. I'm licensed nationally.
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