1. Not Getting Pre-approved
OR: Not Knowing Why an Approval Letter is Your Best Playing Card
Imagine that you’ve found the best home for you and your family. Bonus: it fits your budget! Immediately you make an offer. Unfortunately, it’s too late! The other buyer had a similar offer, but they provided an Approval letter with their offer. This shows the seller a level of commitment and legitimacy towards the offer. Obtaining an Approval letter provides a leg-up on any competing offers.
Let’s break it down…
The difference between prequalified, preapproval, and approved for a home loan can appear trivial to people outside of the Real Estate industry. For Realtors and loan officers, the difference between each level of approval is of critical importance!
A pre-qualified buyer has had a conversation with a loan officer and that loan officer believes that they will qualify.
A pre-approved buyer has had credit pulled and provided documents to a loan officer who has reviewed both and ran the file through an automated system to gain preapproval status.
An approved buyer has made application, submitted documentation, and had the file reviewed by an underwriter who has reviewed the file, its documentation, and issued a conditional approval letter.
As you can see, each level gets more thorough in its review of the buyer. A borrower that has been approved is further along than one that’s just been pre-qualified. This is important to the agents and seller as any ‘Approved’ buyer is more likely to reach the closing table and can close quicker than the other potential buyers that just have a ‘pre-qualification’.
Knowing that, it is always recommend that a buyer takes the necessary steps to gain approval. It can mean a world of difference.
2. Not Sticking to your Closing Timeline & Follow Up
It’s important to follow up with your real estate agent and your lender. Avoid scheduling movers or flights before validating the closing date, which is not necessarily the date in the contract. There are a lot of different people involved in this process and it’s important that everyone has the time to do their job. This includes home inspectors, appraisers, insurance agents, title companies and many others.“Typically, a loan can close in less than 30 days. There are exceptions to that of course. Some mortgage programs can be faster and others, like USDA or Renovation loans, can take longer. My role is to help the buyers navigate their choices, guide the loan through processing and underwriting, work with the agents to present the best offer they can, and then get the loan approved and closed. Through all of those steps, I have to communicate with all parties and keep expectations realistic. Sometimes that fast closing is possible. Sometimes everyone needs to be prepared for a longer process,” explained Jim Bryant, Prosperity Home Mortgage Consultant.
3. Making Big Purchases during the Escrow Period
After committing to a large purchase like a home, some buyers want to continue to purchase other big items during this celebratory time. If you are thinking about buying another big item like a car, don’t. Your credit is pulled initially for your mortgage loan and determines your interest rates. However, when you purchase another big item your credit gets hit again. Based on your new credit score, you may not be able to close on time or be eligible for the loan, which means you may not get to close on your dream home. “The one mistake all home buyers should avoid is changing what got you qualified in the first place. Remember, don’t change your spending habits,” said Jonathan Robert, Prosperity Home Mortgage Consultant.
These life changes include but are not limited to:
· Paying off debt without talking to your Mortgage Consultant – this can actually hurt you!
· Buying new furniture for your new home (cash or credit).
· Not paying your existing mortgage because you think you willclose on the new home before the old one is late.
4. Changing Jobs
Another major mistake is changing your job. Mortgage Lenders, like Prosperity Home Mortgage, evaluates employment history to determine a history of income. This would be another big life change that you need to remember before closing on your home. “The biggest mistake I see from home buyers is when they make unneeded changes to their life. They are already changing their address and taking on a new debt. They should avoid making any others. Keep your job, don’t fire your bank, and don’t take on any other new credit until the keys are in your hand for your new home,” said Jim Bryant, Prosperity Home Mortgage Consultant.
5. Forgetting About Closing Costs and Moving Expenses
Don’t forget that closing costs and moving expenses add up. Closing costs include but are not limited to appraisal fee, home inspection, property taxes, insurances and legal fees. Before you decide on a home it may be in your best interest to research moving company fees and determine how much you plan to place on your down payment.
Why Choose Prosperity Home Mortgage?
Prosperity Home Mortgage, LLC, is a full-service mortgage banker specializing in residential and refinance loans. Prosperity Home Mortgage offers a wide range of mortgage products, including fixed and adjustable rate mortgages, jumbo loans, Federal Housing Administration (FHA), Veterans Affairs (VA) loans, and renovation financing.
“As a company that works side by side with RealtySouth, we are committed to ensuring our involvement in the home buying process is as seamless as possible. We want to be a part of a “One Stop” experience for our clients. Our goal is for someone to walk into a RealtySouth office and be able to get everything they need for their purchase in one place – including financing, insurance and closing services,” shares Jonathan Robert, Prosperity Home Mortgage Consultant.
“We are built to help the buyer succeed. From our team in the field to the technology we create, it’s all about helping buyers win the contract. With buyers having to compete with other buyers on so many offers today, my company knows how important speed and communication is to all parties. We have phone apps that lets our buyers stay up-to-date on the progress of the file, a buyer’s advantage program that lets homebuyers get fully approved for a loan before going under contract, and the ability to lock rates on some programs before they find a home – all these add up to make our buyers more attractive to sellers and more confident in what they can qualify to borrow,” explains Jim Bryant, Prosperity Home Mortgage Consultant.