Home buyers:: Prequalify yourself before you get preapprove for a loan

By
Real Estate Agent with Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC SP98364271

 

 

                                 

 

      Dear Homebuyers,

      After months or maybe years of donating your hard earned money to the "I want to make my Landlord very wealthy because I just love giving away my hard earned money for free" Foundation,you decide that you want to stop giving away your hard earned money and finally become a homeowner- Congratulations to you. ( We are going to party like its 1999 once you settle in your new home ) I thought my kids were going to graduate from Grad school before you buy a home. ( I have no kids by the way )But before you start your home buying process,there is one thing that I need for to do for me. Pre-qualify yourself before you apply for a loan.

      You need to do a debt to income ratio which is the ratio of a borrower's total of debt as a percentage of their gross income. Nobody knows your expenses better than you do. You make the money and you know how much of it you spend on bills. Home buyers you simply need to create a chart similiar to this before you get preapprove for a loan.

INCOME

Monthly Income ( Take home )-

Salary/Wages -

Social Security-

Military Pay-

Pension/Retirement Income-

Bank and Investment Interest-

Alimony/Child Support-

Rental Income-

Unemployment-

Food stamps-

Royalties-

Business Income ( Draw )-

Other-

          Total Income-

DEBT

Outstanding Debt Payments ( Monthly )-

Credit Card Payments -

Student Loans-

Car Payments-

Recreational Vehicle/Boat Payments-

Bank/Credit Union/Loan Payments-

Furniture and Appliance Payments-

Other Credit Loans or Accounts -

Other Debt Payments-

 

Debt to Income Ratio ( Calculated )

Monthly Debt Payment - 

   ( divided by )

Monthly Income-

   ( Equals )

Debt to Income Ratio -

Creditors say that a debt to income ratio of 35% or higher is a higher credit risk. 20-35% is questionable credit,10-20% -Good credit risk and less than 10% means that you are in great financial shape.

 

Real Estate Professionals need to tell all of our clients during our first contact with our home buyers that they should add at least an additional 50% to their current rental income budget. Additional money will cover additional expenses that a lot of first time home buyers fail to calculate into their monthly mortgage payments such as property taxes,water,gas,electricity,home maintainance,and home insurance and other home expenses  until they pay their first mortgage payment.

 

One thing that we as Real Estate Professionals need to educate our clients more. And that means more than just accept a preapproval letter from some lending institution called "John and Jill loves Dollar,Dollar bills"only to find out that the company folded months ago and I didn't bother to verify the information of the preapproval letter. Most preapproval letters now are outdated not even after a month now but a week. We need to restore the trust of home buyers and sellers in a time when they really need our help. Click on this link to Calculate your debt to income ratio-

 

To receive your free list of "Houses for sale in Washington DC",please give me a call at your earliest convenience. I can be reached at 202-378-0283 (Direct). I can also be reached online on my websites www.buyandsellnewhomes.com and www.freelistofhomesforsale.com.  Thank you very much. Looking forward to working with you and helping you make your home purchase a stress free and very happy one. Lanre Folayan  -Real Estate Professional with Exit Premier Realty.  "Buy and sell a home in Washington,DC"                                                                                                              

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Topic:
Home Buying
Location:
District of Columbia District of Columbia County Friendship Heights
Groups:
Mortgages
Realtors Needing the services of the Lending Powers
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Tags:
preapproval letters
home buyers
debt to income ratio
exit real estate agent lanre folayan
buy a home in washington dc

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Rainer
218,543
Lisa Friedman
Alliance Realtors - Bedminster, NJ
Central New Jersey Real Estate
Lanre, good post. Its amazing how many people out there don't have a budget and don't know how much they are spending.
Mar 29, 2008 12:54 PM #1
Rainer
12,873
Angela Meeler
Keller Williams Atlanta Partners - Monroe, GA
Gr8 blog and much needed
Mar 29, 2008 01:29 PM #2
Rainmaker
394,850
Elizabeth Cooper-Golden
Huntsville Alabama Real Estate, (@ Homes Realty Group) - Huntsville, AL
Huntsville AL MLS
Lanre- What an excellent post!  Many buyers have no clue, and this will really help them. Way to go! Elizabeth
Mar 29, 2008 01:30 PM #3
Rainmaker
807,401
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

Lisa- That's why we spend $102 for every $100 dollars we make. Unbelievable. Thanks for your comments.

Angela -Thank you Angela! We need to storm places and drag out the home buyers hiding. Its okay homebuyers. You can come out and play buy. Thanks for your comments.

Elizabeth-Thanks Liz. This can be a good reason why a lot of home owners have lost and going to lose their homeowners. We just need to do more in educating our clients. Thanks for your comments.

Mar 29, 2008 02:56 PM #4
Ambassador
627,972
Roland Woodworth
Q Realty - Clarksville, TN
Q Realty - Power In Real Estate
WoW.... if all ratios were that good..... We would be in trouble..... VA loans can be done at 42%
Mar 29, 2008 03:00 PM #5
Rainmaker
807,401
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES
Roland -I am sure this doesn't apply to all states. But however,the lower the debt to income ratio,the better. That's why I think home buyers should prequalify themselves first before they apply for a loan. We all know that just because some has been preapprove for a certain loan doesn't mean that a first time home buyers should spend that much on their first home. We need to help home buyers make better home buying decisions. Thanks for your comments Roland.
Mar 29, 2008 03:07 PM #6
Rainmaker
1,036,603
Kathy Clulow
RE/MAX All-Stars Realty Inc. Brokerage - Uxbridge, ON
Trusted For Experience - Respected For Results
Lanre -  Good advice hope your readers pay attention. The Market would not be in the mess it is if more had. 
Apr 01, 2008 05:09 AM #7
Rainer
58,173
Don Draughn - Mortgage Professional
High Point, NC
Great information.  People don't realize that this is a very important part of the buying process.
Apr 01, 2008 06:42 AM #8
Rainer
62,465
Bart Whitmore
Keller Williams- Louisville - Louisville, KY
Real Estate Agent
Good post, there is a difference between prequalifing and preapproval, thanks for trying to educate the public---Bart
Apr 01, 2008 07:08 AM #9
Rainmaker
807,401
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

Kathy- Absolutely. It is our job to educate them. Something most of us real estate professionals aren't doing anymore. Thanks for your comments.

Don-Very important part. Everybody who wants to buy a house are not financially capable to buy a home.

Bart-Most home buyers don't even know that. My people perish because of lack of knowledge. Thanks for your comments.

 

Apr 01, 2008 02:15 PM #10
Anonymous
DW

Good post.  I think that it is definitely necessary for prospective homeowners to realize that there are actually differences between both of these concepts.  I myself was quite confused until I started to research more and more on the issue prior to getting a loan for my first home.  I think that you did a great job of explaining each of these simply and concisely.  

 

I also found that this article helped me better understand what I needed to know regarding preapproval and prequalification:

http://www.bankapedia.com/mortgage-encyclopedia/faqs/684-what-is-the-difference-between-being-prequalified-and-preapproved

Dec 22, 2009 08:36 AM #13
Rainmaker
807,401
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

DW-Thank youvery much. Happy Holidays to you.

Dec 22, 2009 04:29 PM #14
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Rainmaker
807,401

Lanre-"THE REAL ESTATE FARMER" Folayan

I don't make promises.I deliver results.SOLD HOMES
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