The Papineau Team's Blog
85 Carlton Ln, North Andover, MA 01845
If you’re a first-time homebuyer, odds are you’ve thrown the words “prequalified” and “preapproved” interchangeably. However, when it comes to home loans, there are some very important differences between the two.
For buyers hoping to purchase a home with a few missteps and misunderstandings as possible, it’s vital to understand the procedures involved in acquiring financing for a home.
Today, we’ll break down these two real estate jargon terms so that you can go into the mortgage approval process armed with the knowledge to help you succeed in securing a home loan.
Let’s start with the easy part--mortgage prequalification. Getting prequalified helps borrowers find out what kind and what size mortgage they can likely secure financing for. It also helps lenders establish a relationship with potential customers, which is why you will often see so many ads for mortgage prequalification around the web.
Prequalification is a relatively simple process. You’ll be asked to provide an overview of your finances, which your lender will plug into a formula and then report back to you whether or not you’re likely to get approved based on your current circumstances.
The lender will ask you for general information about your income, assets, debt, and credit. You won’t need to provide exact documents for these things at this phase in the process, since you have not yet technically applied for a mortgage.
Prequalification exists to give you a broad picture of what you can expect. You can use this information to plan for the future, or you can seek out other lenders for a second opinion. But, before you start shopping for homes, you’ll want to make sure you’re preapproved, not prequalified.
After you’ve prequalified, you can start thinking about preapproval. If you’re serious about buying a home in the near future, getting preapproved will simplify your buying process. It will also make sellers more likely to take you seriously, since you already have your financing partially secured.
Mortgage preapproval requires you to provide the lender with income documentation. They will also perform a credit inquiry to receive your FICO score.
Mortgage applications and credit scores
Before we talk about the rest of the preapproval process, we need to address one common issue that buyers face when applying for a mortgage. There are two types of credit inquiries that lenders can perform to view your credit history--hard inquiries and soft inquiries.
A soft inquiry won’t affect your credit score. But a hard inquiry can lower your score by a few points for a period of 1 to 2 months. So, when getting preapproved, you should expect your credit score to drop temporarily.
Once you’re preapproved for a mortgage, you can safely begin looking at homes. If you decide to make an offer on a home and your offer is accepted, your preapproval will make it easier to move forward in closing on the home.
Once the lender checks off on the house you’re making an offer on, they will send you a loan commitment letter, enabling you to move forward with closing on the home.
282 S Main St, Haverhill, MA 01835
Architecturally speaking, many home buyers have very definite ideas about their preferred house style.
Whether it stems from a sense of practicality or positive childhood memories, few house hunters are "on the fence" when it comes to the number of stories their ideal house should have.
Perhaps you're one of those people who grew up in a two-story house and wouldn't feel right sleeping down the hall from the kitchen and family room. Some people just prefer their sleeping quarters to be on the second floor!
Although it's a matter of personal preference, there are certain practical aspects to buying a ranch-style or traditional rambler house.
Less stair climbing: While this is an advantage that seniors typically value the most, stairs can be a burden anyone -- especially when you're lugging suitcases, boxes of books, or that heavy new futon you wanted to put in the guest room.
You can probably also recall countless evenings when exhaustion set it, and the last thing you felt like doing was climbing a long, winding staircase to get to your bedroom. (Okay, well maybe it's not "winding," but you get the idea!)
Then, of course, there are those times when you haven't been to the gym in a few months -- make that years -- and your home treadmill has turned into more of a clothes rack than an exercise machine! Although going up and down stairs a few times a day can help counteract the effects of a sedentary lifestyle, sometimes stairs can feel like they're more trouble than they're worth! That would definitely be the case if you have any physical conditions or health problems which make climbing stairs painful or medically unsafe. (Your physician can provide helpful advice on the latter.)
Home maintenance: If you hate getting up on tall ladders to paint your house or clean your rain gutters, owning a one-story home is a solution. Since home maintenance and repairs can often end up costing a bundle, it may make sense to consider doing your own exterior house painting. Although it's time consuming, messy, and sometimes a bit strenuous, painting your own house can potentially save you thousands of dollars in labor costs. Naturally, you'll still need to buy your own paint, brushes, rollers, and other supplies, but the amount of money you can save on labor is substantial.
Personal safety: If there's a fire or other emergency and you need to quickly evacuate your home in the middle of the night, a first-floor window can be safer and less scary than having to exit your house though a second-story window. While this type of dire situation is unlikely and will hopefully never happen to you, it's one of many factors to consider when comparing and contrasting ranch-style homes with other architectural styles.
If you do opt for a two-story (or three-story) architectural style, such as a colonial, craftsman, Tudor, Victorian, or farm house, it's especially important to have a fire escape ladder on hand, as well as a working knowledge of its proper use.