Mandi Feely has been in the Mortgage industry for over 20 years. Her insight into how the industry has changed, and how it operates will provide you with the best service of any home loan originator in Idaho. Take a moment ask her for advice. 

 

 

 

Mortgage Pre-Approval Process and the Benefits of Getting Pre-Approved in the Boise Real Estate Market

For first time home buyers, the process of purchasing a home can seem daunting. It is difficult to know where to begin. Veterans of the home buying process will often offer conflicting advice. Some insist buyers start with a realtor to find a desirable property first, while others recommend starting with a mortgage broker to begin sorting out the various financing options. While there are certainly benefits to both approaches, the benefits of beginning with a pre-approval from a mortgage broker far outweigh the benefits of beginning with a realtor.

Borrower’s Guidelines for Pre-Approval

The mortgage pre-approval process is usually fairly simple. In order for borrowers to be pre-approved for a mortgage loan, they must first contact a qualified mortgage broker who will provide a buyer with guidance and the steps necessary to start and complete the pre-approval process. The mortgage broker will gather personal information such as current salary and employment history, as well as some basic information to secure a credit report. Borrowers will need to provide their social security numbers and paystubs, as well as a consent form to release a credit report to the mortgage broker. The broker will then submit income and credit information to several different lenders to determine basic eligibility for a home mortgage loan.

The potential lenders will review the salary and credit information to determine if a particular borrower meets the criteria for a mortgage loan, and then issue an approval or denial. If an approval is granted, a letter will be issued as a commitment that a borrower would qualify for a mortgage loan as well as the amount a borrower would qualify for. There may be several pre-approvals from several different lenders, at which point the mortgage broker will present all of the options to the borrower to determine which loan package will best meet the borrower's needs. Pre-approvals work as a preliminary commitment to lend to a borrower, and are typically good for 60-90 days from the origination date.

Difference between Pre-Qualification and Pre-Approval

There is a difference between a potential buyer being pre-qualified and being pre-approved for a mortgage loan. A pre-qualification simply states that a borrower meets some of the necessary criteria to qualify for a home loan based on limited preliminary information. A prequalification does not mean the borrower will actually secure financing. A pre-approval, however, tells a borrower, and a seller, that the mortgage lender is ready to make a loan.

The Value of Pre-Approval When Purchasing a Home

Because a pre-approval is not necessarily a guarantee to qualifying for a mortgage loan, some borrowers feel it is irrelevant. However, it is the most important step in the process to determine mortgage loan eligibility, and it shouldn’t be skipped. A pre-approval letter from a lender is often an invaluable resource for borrowers as it gives them a starting point for securing the necessary financing. Other ways in which a pre-approval is a helpful asset in the home-buying process include:

  1. A pre-approved loan amount provides a realtor with a legitimate price range for an interested borrower. This is critical in the process, as it saves a lot of time for all parties if the borrower is looking at homes priced within an affordable range.

 

  1. A pre-approved loan amount provides a baseline for expected mortgage payments for borrowers. Mortgage brokers can help borrowers determine approximate monthly mortgage payments based on the amount of the pre-approval as well as current interest rates on mortgage loans. While all of this information is subject to change between the pre-approval process date and the time of the closing, it is an excellent tool to give a close approximation in determining affordability by borrowers.
    1. Pre-approval will make a borrower’s offer on a home more legitimate and attractive to sellers. With secured pre-approval, mortgage lenders and sellers alike, take an offer more seriously. Borrowers without secured lending, prior to making an offer on a home, are a bigger risk for sellers, and therefore aren’t taken as seriously in the buying process than somebody who has already shown mortgage loan eligibility. Most bank-owned homes will require a pre-approval letter before accepting an offer to purchase.

How a Mortgage Broker Helps with the Pre-Approval Process

A mortgage broker works for the borrower, and not the lender. A mortgage broker will assist borrowers through the entire process of purchasing a home, starting with pre-approval. When borrowers begin working with a mortgage broker, the broker will help determine which lender will best meet the borrower’s needs, starting with shopping around for lenders and acquiring the necessary pre-approval for financing. Mortgage brokers will help the borrower determine not only what is affordable, but will also approach lenders for the best possible pre-approval terms as far as the amount borrowed and possible interest rates once the financing is secured.

The Value of Pre-Approval to a Real Estate Agent

It is not necessary for a borrower to have a pre-approval prior to working with a real estate agent to find a dream home. However, many realtors and agents will defer the buyer to a mortgage broker or lender to obtain pre-approval prior to investing a lot of time in searching for eligible properties. The real estate agent would like some sort of assurance that his or her time isn’t being wasted with a client who won’t be able to secure financing. A pre-approval also gives the real estate agent a price range to start the search for eligible properties which makes the search process much easier and less time consuming for all concerned Therefore, realtors prefer to work with borrowers whose interest in purchasing a home is accompanied by a letter of pre-approval.

How a Mortgage Broker Can Help Borrowers in the Boise, ID Market

Certain regions of the country have special considerations in terms of real estate and mortgage lending. Different trends throughout the country have a major influence on the demand and need to obtain the assistance of a professional. Boise is showing a tremendous upward swing in the real estate market, which makes the services of a mortgage broker extremely helpful and a valuable asset for buyers. Mortgage brokers in the Boise area are familiar with market trends, and are able to help borrowers make the most out of available options for mortgage lending. Qualified mortgage brokers in Boise and neighboring towns make it easier for borrowers to find the right lender at the right interest rate.

Value of a Good Faith Estimate

A good faith estimate, otherwise known as a GFE, outlines some of the basic terms of the loan for the borrower. It provides borrowers with estimated payment amount information, including estimated interest rates as well as some vital information about the terms of the mortgage loan. Mortgage brokers or lenders will provide a GFE within three days of receipt of a loan application, unless the application is denied in less than three days. The GFE is important in the lending process as it is required to be provided by the lender and approved by the buyer before the loan can be accepted by the borrower. The GFE is particularly valuable to borrowers as it can help uncover any hidden fees or costs associated with borrowing. The GFE also helps borrowers determine whether their potential home purchase is reasonable and affordable based on their incomes.

There are few purchases in a person’s life which are as monumental as the purchase of a home. It is generally the biggest investment most people will ever make. The home buying process can seem extremely complicated to borrowers as some real estate markets and lending institutions throughout the country make navigating the waters of home ownership unnecessarily difficult. The Boise real estate market is showing considerable promise in the upward trend of buying and selling, making the services of mortgage brokers extremely valuable for potential borrowers. Mortgage brokers in the Boise area not only help borrowers understand the entire process, but they help borrowers to secure pre-approval and ultimately obtain financing for their homes. The pre-approval process is fairly simple and straightforward, and once borrowers have obtained their pre-approval letters, many doors are opened to simplify the process of purchasing the home of their dreams.

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