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YOUR homework assignment!!

Okay, so I have been in the Real Estate field for a few years now and I am doing pretty well, so far. I would love to learn more about the Mortgage process.

My challenge to you Mortgage people out there, Educate me! I want to know about the whole process. I hate being unarmed when asked a question about mortgages.

Tell me about the Pre-qualification vs Pre-approval process. I do know that they are different, explain the difference for myself and other newbies.

Credit, what's the big deal?? (I do know how important good credit is) I want you to spell it all out for me. I am sure that there are consumers out there reading this, I am also pretty sure that there are consumers out there that don't think they could ever qualify for a mortgage, whether it is due to credit, job, income level or etc...Explain it to me, therefore you will also be explaining it to the consumers.

I met a Buyer (Couple) at a home this past week looking for a Lease Option/Rental. When I got the call (Which incidentally was a floor call at my office) I spoke with a Young couple that were starting out their lives together and they decided to ask people they knew about qualifying for a mortgage. They were talked out of even trying to qualifying. I met them at the rental/lease option they were interested in and began to ask questions. Why do you want a lease option? Would you rather buy a home? Did you know that if you bought this home as a Lease Option you will be paying more then what the Builder could build it new in this market? My Buyers were very aware that everything I was saying was accurate and agreed they would probably pay too much for the home in a lease option. They then explained that they had asked some questions to various sources and were pretty much talked out of getting approved for a mortgage or even trying to get approved. I then explained that most rental agencies will pull their credit. Why would they not want to get their credit pulled by a Mortgage company and see if they could qualify for a mortgage rather then a rental when clearly, that was their ultimate goal anyway? They agreed and I got them in touch with a great Mortgage company/Person. They are now in the process of getting pre-approved and if they get approved, we will begin looking for a home to buy. If they have some work to do on their credit, they will now be aware of it and we will then find them a rental while they get prepared to buy.

They got me thinking, If they as a young couple are out there talking to friends and family who are not trained Mortgage people or Real Estate people and they received enough information to discourage them from even "Trying" to buy a home, then there must be more like them. I know that even being in Real Estate for the last 3 years, I still have a lot to learn about Mortgages and financing. I want to learn it. Please fill up this blog with the information you feel if important for both consumers and Realtors to understand about the process. Thanks in advance for any information that is shared here and I look forward to learning all I can.

Posted by Monica Hubert on 10/11/2008 09:53 AM

Comments (4)

Educate a Newbie, Please! in the Mortgage / Finance Channel

mortgages, preapproval, buying real estate, ocala real estate, ocala homes for sale

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4 Comments on YOUR homework assignment!!

OCT

2008

Watch out lease/buy options they are burning buyers left and right to do the sellers not paying the underlying mortgage. Be very careful and get an attorney and escrow accounts involved.

You are doing the right thing by getting information for your buyers. We as agents need to have all the information available so we can help our buyers.

OCT

2008

Give me a call and I'll walk you through the whole process start to finish. I am new to Florida but did mortgages for 5 years addressing the very scenario you described. I'm now working for Holiday Builders selling new homes - yes, we pay Realtor commissions. Please CALL 352-629-9211

NOV

2008

Monica,

You are headed in the right direction with your inquiries. It's great for an agent to know the mortgage basics when trying to guide a buyer in the right direction. The important thing to remember is the business and the guidelines are always changing. I have been doing mortgages in Ocala for 11 years, so hopefully my information can be helpful.

1. A pre-qual and a pre-approval are very different. A pre-qualification involves taking basic income, asset and debt information from the borrower, possibly pulling credit, and determining what price range a borrower should be looking in. If credit is pulled then the loan officer has determined which program they should qualify for based on credit score and payment history. This gives the buyer an idea of the payment, interest rate and other costs, but in no way does it guarantee a loan approval or commitment. At this point home ownership is a possibility, but there is much more information necessary. A pre-approval is obtained when a buyer has a contract on a specific property. It is not a commitment to lend. Generally a pre-approval is obtained through automated underwriting and has a list of borrower conditions as well as property conditions. Once all the conditions are gathered, an underwriter reviews the file and an approval is issued. The final approval will contain funding conditions and a commitment to lend is given when the closing documents are ready to be signed.

2. Credit is very important to the loan. Credit scores determined which program borrowers fit into and how much they will pay to borrow the money...obviously the better the credit the less they have to pay monthly and in the long run. Certain programs require higher interest rates with lower credit scores and that means a higher monthly payment which could keep a borrower from purchasing homes in the price range they want.

3. Jobs are necessary to buy a home these days. Lenders require the buyer have a job for 2 years or if they have changed jobs, they need to be in the same line of work. If they are an employee, they will need to provide 2 years w-2's and 30 days worth of pay stubs. If they are self-employed, they need to be prepared to supply two years of income tax returns including all pages and schedules.

4. Down payment funds- we need a paper trail. Where did it come from? Is it a gift? Savings? A buyer must be prepared to show it in an account they own for at least 60 days or show where it came from. So if mom and dad are giving them money then mom and dad have to document what account it came from and keep the deposit slip if they move it to their account.

Lease options are a great alternative for people who may not have the down payment or credit to purchase a home right away. While they are leasing a home they should consult with a mortgage professional who can guide them in the direction they need with their credit file, income and down payment. It's important to use a mortgage professional who has experience.

Please email me if you have additional questions or comments. I hope this was somewhat helpful for you and your buyers.

Beverly Jeppesen 352-817-3192

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