WITH the housing market
warming up in many areas, and multiple offers becoming more commonplace, buyers
who want an advantage in the bidding process will need more than a mortgage
prequalification. They will need a preapproval. The
difference is significant. Prequalifying for a mortgage is based solely on what
you disclose to the loan officer or broker about
your earnings, credit score and total assets, including what is available for a
verbal — it doesn’t really mean anything,” beyond providing some basic guidance
on the range of prices you may be able to afford, said Kevin Chittenden, a vice
president and regional sales manager in Paramus, N.J., for Wells Fargo Home
preapproval, by contrast, requires borrowers to provide documentation of their
income and their assets.
lender typically pulls your credit report and score, and you should gather
together almost everything you will need for the actual mortgage underwriting:
W-2 wage statements; 1099s, which show things like dividends and interest
income; recent pay stubs; bank statements; and statements from Individual Retirement Accounts
and 401(k)s and
other assets that could show you have the resources to buy and maintain a home.
Fargo, one of the country’s largest mortgage lenders, the first quick review
provided by an underwriter constitutes an agreement to lend. “It’s a real
commitment, a commitment to lend,” Mr. Chittenden said.
lenders may treat preapprovals as more of an opinion on the person’s ability to
borrow, not a guarantee to lend, said Jack Guttentag, who runs the Mortgage
Professor Web site. Generally, borrowers need to have chosen a property and
have it appraised before they can expect a firm commitment from a lender, he
preapproval is more important now, with so many more homes receiving multiple
bids, and because the housing market in many parts of the New York region has
been getting stronger.
carries more weight when you go to negotiate a deal,” said Ray Mignone, a
certified financial planner in
Little Neck, Queens. “It
gives them bargaining power.”
should ask the lender to provide a good-faith estimate on closing costs and
fees along with the preapproval. Many will provide this only once you have a
home under contract, but some will give you an estimate of those costs, said
Sofi Cordero, a senior housing counselor with La Casa De Don Pedro, which works
on affordable housing and neighborhood development in Newark.
preapproval letter should include the amount a borrower is qualified to borrow,
as well as the loan officer’s contact information. Some letters may have an
estimated monthly payment. But details about the loan type and interest rate
will not be included; those are filled in when you are ready to receive the
loan, experts say.
important. Buyers should aim for obtaining a preapproval letter from a lender
within 30 to 60 days of the expected purchase date, Ms. Cordero said. That is
because some letters expire in 90 days or so. (Wells Fargo’s, for instance,
last for 120 days.)
income and bank statements may also need to be updated if it has been a few
months between preapproval and the signed contract for buying, Mr. Chittenden
Fargo charges would-be borrowers $18 for the credit report for a preapproval;
the other costs of the mortgage start once you have a purchase agreement, he
Other lenders may waive the
preapproval and application fees because they want to sign you on as a
customer, Ms. Cordero noted, adding that if you find another lender with better
terms, you are under no obligation to use the lender that provided the
By VICKIE ELMER
Author:Mona Thind Phone: 803-269-4774 Dated: August 22nd 2013 Views: 2,434 About Mona: ...
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