Happy 4th of July!
As we (here in the USA) approach the Independence Day holiday, we'd like to wish you and your friends and family a safe 4th of July holiday weekend. We're taking a break from our traditional posting here for the holiday, and will resume our posts on Monday.
As we all remember why we celebrate this holiday, don't get so caught up in cookouts and fireworks that you forget what our Independence really means, and all the men and women who are out there fighting for us so we can celebrate our freedom with our families. Our prayers are with the men and women in our Armed Forces as we celebrate this Independence Day holiday.
Be safe if you're traveling, and we will return with our regular posts on Monday.
Mortgages: Pre-Qualified vs Pre-Approved
When you are pre-qualified for a mortgage of some amount, this is simply a quick measure of what you probably can borrow. It is based on a few answers you give to things like how much income you have and the amounts of any debts you have. It does not, however, mean the bank or lender who pre-qualifies you has agreed to lend you anything. Your income still needs to be verified, and your credit report will need to be looked at.
Loan pre-approval is different. Once the lender has verified any important facts and seen your credit score, you can be approved for a loan up to a certain amount. You should get a letter showing what they will lend you and at what interest rate.
This still does not guarantee you a loan. If interest rates change much prior to you finding a home and making an offer that is accepted, the lender may lower the amount they are willing to lend to you, since the total payment amount is important to whether you can afford the loan or not, and higher interest rates could change this amount. Also, changes in your credit score could affect the final loan commitment. Keep this in mind, and make all offers subject to an actual loan commitment.
Make a few copies of your loan pre-approval letter. Presenting it with an offer on a home is a good way to show the seller you are serious and prepared to close. If the seller has ever had an offer fall apart due to a buyer who couldn't get financing, he will be very happy to see your pre-approval letter. If you are looking for more than six months, you may want to get a new pre-approval letter, to show that you are still able to buy at the current interest rates and with your current credit score.
If you have any questions about the difference in being pre-qualified vs. being pre-approved, just use the "comment" link below and post your question here. We'll reply with an answer to your question. Remember, your email address will never be published here to protect your privacy.
Real Estate News - July 2008
Our July 2008 Newsletter is now up…
From the right Nav Menu, Find "PAGES AND NEWSLETTERS" and Select "July 2008 below "Our Monthly Newsletters".
Beating High Grocery Prices
Even though saving a few dollars here and there at the grocery store may not sound like something we should cover on a real estate website, we are trying to bring you multiple ways to save more dollars these days any way we can, because the price of food these days is enough to ruin your appetite, but don't put down your fork just yet. Save some serious green at the grocery by using some of these tips from Money editor Stacy Johnson. This video runs 1:39…
If you know of a quick tip you can share on saving a buck or two… sound off here by using the comment link below. Let everyone else in on your money saving ideas. Your email address will never be published here, so don't worry about that.
FICO Scores: Who Have The Best Overall?
Who have better credit scores on average - home buyers with higher or lower incomes?
Many might guess home buyers with higher incomes. The surprising answer is: People with lower incomes have slightly higher FICO scores. That finding, which emerged from a statistical analysis of all approved mortgages insured by the Federal Housing Administration (FHA) during fiscal 2007, is now supporting a forthcoming major policy switch that could affect thousands of buyers and refinancers.
FHA, which for decades has used a one-size-fits-all approach to pricing its insurance on home loans, plans to shift to a "risk-based" system keyed to FICO scores and down payments, beginning as early as mid-July. Private sector lenders and insurers have priced interest rates and premiums using sliding scales of FICO scores and down-payment amounts since the mid-1990s.
Under the new system, according to FHA's outline of its plan, "a larger number of low-income borrowers (will) benefit from premium reductions than . . . moderate-, middle- and upper-income borrowers combined."
To set premium rates by credit standing, FHA plans to use the middle score of an applicant's three FICOs generated by the national credit bureaus - Equifax, Experian and TransUnion. If only two scores are available, it will use the lower. For applicants with thin or "non-traditional" credit histories on file at the bureaus, FHA will underwrite and price the loans without reference to FICOs, with heavier emphasis on rent and utility payments among other measures of creditworthiness.
Comments about this move on the part of FHA? Sound off by using the "comment" link below.
