Three Things You Need to Know About Pre-Approval

If you’ve made the decision to begin searching for your dream home, you need to be sure that you have a few important details taken care of. One of the first steps involved is to obtain a letter of pre-approval for a mortgage. Having a pre-approval letter from a lender, shows sellers that you are serious about purchasing a home and it shows how much home you can afford.

Check Your Credit

Before contacting a lender, you will need to get at least one copy of your credit report to make sure everything is correct. If there are any discrepancies in your credit history, do your best to identify and resolve those. Lenders will go over every detail of your credit history to determine if you are worth the risk. A credit score of 620 is recommended to qualify for a mortgage, but a higher score is always better and may qualify you for better interest rates.

Determine Your Debt-to-Income Ratio

Your debt-to-income ratio, also known as DTI, compares how much you owe each month in expenses, to how much you earn. This includes student loans, credit card payments, and car loans. Typically, lenders prefer a buyer with a DTI of 45% or less. If your DTI is much higher, you may want to consider paying down your outstanding debt before buying a home.

Gather Your Paperwork

Once you are ready to contact a lender for your pre-approval, you may need to provide proof of income, financial accounts, and other personal information.

Some of the necessary paperwork will include your Social Security number, employment verification such as pay stubs, W2s, and bank account information. Many lenders prefer that you have at least two years of continuous employment but be sure to confirm this with your lender.

Being pre-approved for a mortgage may give you an advantage over other potential buyers because it shows the seller that you have the financial stability to secure a loan.

Should you have additional questions or are ready to begin the pre-approval process, please reach out to me using the contact information below.

Millennials Are Buying Older Homes

Recent research from the National Association of Realtor’s shows that more young Americans are now purchasing older homes over new build homes.

In 2011, the average age of homes sold was 18 years. Now, the average age of a previously owned home is 28 years.

Younger buyers (aged 26 to 35) are showing more interest in older homes with many purchasing “fixer-uppers”.

Here are a few reasons why:

1. Longevity

Over all, the quality of construction in older homes will surpass a newly built home. There is a reason that older homes, some being 50-100 years old are still standing and are in very good condition given their age. Homes in the past were built better, with higher-quality materials and more attention to detail. For example, supports made from solid wood from old-growth trees, walls made of plaster and lathe, and real hardwood floors were all part of the detailed craftsmanship that went into older homes.

2. Affordability

Older homes can be more affordable because they aren’t necessarily made with today’s energy-efficient materials found in new builds. In addition, older homes pre-1970 may not have been updated, which can drive down the cost. Many younger home buyers are using this to their advantage by purchasing a fixer upper and taking on upgrades themselves.

3. Established Neighborhoods

Buying a home in an established neighborhood is preferable to many buyers because it already has many of the things that most people want in their neighborhood; established schools and nearby businesses; parks and green spaces; mature shade trees and more.

4. Spacious Yards

Many buyers wish to have a large yard for their growing family, pets or to entertain family and friends. Most older homes have larger yards with established trees and shrubs as well as space for family fun, a swimming pool or a large garden.

5. More Character

Most older homes have more character than a new build. Many of these homes had great detail put into molding, flooring, tile, built-ins, banisters and other unique architectural designs. If the home has been properly maintained by previous owners you may find a gem with many or all of its original charming details.