Below you will find the most frequently asked questions about real estate by home buyers.
Click on the big + button to view the answer.
What is a conforming loan?
A conforming loan is one that is limited to $647,200 for most of the U.S., which means you may be able to avoid the stricter requirements of a jumbo loan.
Loan limits vary over time and by location so you should check with your lender or Realtor for the latest information.
Other loan types include jumbo loans, FHA, and VA.
A number ranging from 300-850 that’s based on an analysis of your credit history.
Your credit score helps lenders determine the likelihood you’ll repay future debts.
You’ll need a score of 620 or better, but you’ll get better financing rates with a score of 720 or higher.
A Deed of Trust is like a mortgage. It is an agreement between a borrower (you) and a lender (a bank or other financial institution).
What is a Jumbo Loan?
Conforming loan limits are $647,200 for most of the U.S., so anything above this would be a jumbo loan.
Jumbo loan requirements are stricter and there are more requirements you will need to satisfy.
Find out more about jumbo loans here.
The interest rate on a mortgage loan you pay to borrow that money when buying a home.
The lower the rate, the better.
BTW, the “t” is silent, so pronounce it “morgage”.
What is a Pre-Approval Letter? 🤔
📄 It is a letter from a lender indicating you qualify for a mortgage of a specific amount.
Getting Pre-Approved
📃 You’ll fill out a mortgage application, provide documents, and bank statements, get a copy of your credit report, etc.
Getting pre-approved is what you need to do before starting a home search. The person selling your dream home will want to make sure you really are qualified to buy. Most sellers aren’t willing to accept your offer with only a pre-qualification.
What is getting Pre-Qualified? 🤔
You contact a lender, provide a bit of financial information to them, and they tell you about how much you can afford to buy. That’s about it. It’s usually done over the phone, and your credit report is not needed at this point.
WARNING! 🔥 It’s NOT a promise of a loan. You are not guaranteed any particular interest rate. And you are not ready to purchase a home. What you have is an idea of what you may be able to buy. It’s a starting point, and a good way to start planning.
You’ll want to get a Pre-Approval Letter from your lender before you start shopping for a home.
One of the first steps in purchasing a home is getting either pre-approved or pre-qualified for a mortgage. Unless of course, you’re buying with all cash. 😁
It’s very easy to get confused between the two things. So, should you get Pre-Qualified or Pre-Approved for a mortgage loan?
Without getting into too much detail, we’ll give you just the essentials in understanding the difference, not the complete procedure for each.
Pre-Qualified
This is the simpler of the 2 processes. You contact a lender, provide a bit of financial information to them, and they tell you about how much you can afford to buy. That’s about it. It’s usually done over the phone, and your credit report is not needed at this point.
WARNING! 🔥 It’s NOT a promise of a loan. You are not guaranteed any particular interest rate. And you are not ready to purchase a home. What you have is an idea of what you may be able to buy. It’s a starting point, and a good way to start planning.
Check out Investopedia for a more in-depth explanation if you’re curious. https://www.investopedia.com/articles/basics/07/prequalified-approved.asp
Pre-Approved
This one is where the rubber meets the road. Paperwork, and plenty of it. You’ll fill out a mortgage application, provide documents, bank statements, get a copy of your credit report, etc.
It takes more time and there are more questions. It’s best to start with plenty of time before you plan to start looking for a home. That way you can deal with finding the papers you thought were in that one file cabinet, get your updated investment info, and try to fix any credit issues you may have.
Getting pre-approved is what you need to do before starting a home search. The person selling your dream home will want to make sure you really are qualified to buy. Most sellers aren’t willing to accept your offer with only a pre-qualification.
Again find out more here. https://www.investopedia.com/articles/basics/07/prequalified-approved.asp
Conclusion
Save yourself some heartache, heartbreak, and hair-tearing-out. Get pre-approved before shopping for homes.
Better yet, call me, Libby Guthrie at 925-628-2436 and I’ll answer your questions about getting started, and if you like, I’ll connect you with the right lender for your situation.
Just so you know, before my 30+ years as a real estate agent and broker, I spent 15 years in mortgage banking. I know what I’m talking about and I love to share my expertise with you and your family.
Contact me today, share this article with a friend, and please, share on your favorite social site. Thanks!
