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Mortgage 101: The Difference Between Pre-Qualification and Preliminary Approval

By Tim Wilson, Chief Executive Officer, President, Prosperity Home Mortgage.

Depending on your market, multiple home offers are becoming more common. That’s why it’s important for you to be armed with all of the necessary tools before you find your dream home. Getting a letter from your mortgage lender before you start looking for your home is a great way to get an advantage over others in the bidding process. But with lenders offering both pre-qualification and pre-approvals, it can be tough to figure out exactly what you need. Understanding the difference between the two can be crucial to getting the home you want.

What is a lender pre-qualification?

This is the first step to getting a mortgage. In this process, the lender will ask you a few questions about your overall financial picture, including your debt, income and assets. After evaluating the information, the lender will provide an estimated mortgage amount based on the unverified information provided. This will give you an idea of how much home you can afford as you start your hunt. It’s important to realize that since this is based on unverified information and does not include a credit report, it does not carry the same weight as a mortgage preliminary approval.

What is a lender preliminary approval?

The next and more detailed step in the mortgage process is generally a preliminary approval. In this step, you’ll complete a mortgage application and provide the lender with all of the necessary documentation to evaluate your current financial picture. The lender will also check your credit rating. A preliminary approval estimates how much you may be able to borrow based on your verified income, assets and credit report scores. Having a preliminary approval letter makes you more competitive against other bidders but also increases the chance that the lender who offered the preliminary approval will provide your financing.

Are there other options?

Yes, depending on your lender, there may be a variety of additional options. With Prosperity Home Mortgage’s Prosperity Buyer Advantage Program, for example, you can complete much of the financing process (and qualified borrowers may receive a commitment letter) before you even begin searching for a home. Having that commitment letter along with your purchase offer can help further strengthen your position.

The bottom line is that when it comes to buying your dream home, having as much ready upfront as possible is key to putting in a successful purchase offer. Doing your research and securing a preliminary approval is the best way to make sure that your offer is accepted when the time comes, and you get to move into the perfect home for you.

 

 

 

A preliminary approval is based on our preliminary review of credit information only and is not a commitment to lend. We will be able to offer a loan commitment upon verification of application information, satisfying all underwriting requirements and conditions, and providing an acceptable property, appraisal, and title report. Preliminary approvals are subject to change or cancellation if a requested loan no longer meets applicable regulatory requirements. Preliminary approvals are not available on all products. See a mortgage consultant for details.

Prosperity Buyer Advantage is not a final loan approval. A Commitment Letter is based on information and documentation provided by you and a review of your credit report. The interest rate and type of mortgage used to approve you for a specified loan amount is subject to change, which may also change the terms of approval. The interest rate cannot be locked until your offer to purchase a property has been accepted. If the interest rate used for credit approval has changed, you may need to re-qualify. Information provided by you is subject to review and all other loan conditions must be met. After you have chosen a home and your offer has been accepted, final loan approval will be contingent upon obtaining an acceptable appraisal and title commitment. Additional documentation may be required.

All first mortgage products are provided by Prosperity Home Mortgage, LLC. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Licensed by the NJ Department of Banking and Insurance. Licensed by the Delaware State Bank Commissioner. Also licensed in District of Columbia, Georgia, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.

NMLS ID #75164 (NMLS Consumer Access at http://www.nmlsconsumeraccess.org/)

©2017 Prosperity Home Mortgage, LLC. All Rights Reserved.


Financing Your Home: Knowing Your Options Will Save You Money

By Tim Wilson, Chief Executive Officer, President, Prosperity Home Mortgage.

 

It’s a great time to buy a home. Interest rates for mortgages remain near historic lows allowing you to buy more for your money. If you’re currently a renter who has been trying to save for a home down payment, you’ll be happy to hear about these down payment options that can put you on the path to homeownership in no time.

What are the options?

Unlike typical 20 percent down payment loans, there are mortgage programs that offer affordable no and low down payment options. Please note we have listed only a few of the programs available. Not all of these programs may be available to you or in your area and certain restrictions may apply, including loan and lender requirements that vary by program.

No down payment

The Veteran’s Administration (VA) offers zero down payment loans for veterans and active duty military members. With a VA loan, you’ll often pay a funding fee that can be financed with the home loan or paid at closing.

The USDA program also offers no down payment options, which help make homeownership more affordable for low and moderate income families in certain designated rural areas in each state. There are also income limits based on your area’s average median income and number of people living in your household.

Down payments as low as 3 percent (conventional loans)

Conventional loans are offered through Fannie Mae and Freddie Mac with a down payment as low as 3 percent. These programs, though, require private mortgage insurance (PMI), which will increase your monthly housing costs. PMI rates vary depending on the size of your down payment and your credit score. But once you have at least 20 percent in home equity, your PMI payments can be eliminated.

For borrowers who want to avoid paying PMI, there’s another option: get two loans and contribute a down payment of 5 or 10 percent. For example, with an 80/10/10 loan where the first mortgage covers 80 percent of the home’s value, a second loan accounts for 10 percent and the remaining 10 percent is the down payment. Similarly, many lenders also offer 80/15/5 loans, enabling borrowers to make a 5 percent down payment.

Down payments starting at 3.5 percent (FHA loans)

Through the Federal Housing Administration (FHA), loans are available with down payments starting at 3.5 percent, but FHA loans require both an upfront fee and annual mortgage insurance premium (MIP) paid with your monthly mortgage. Unlike PMI payments, you’ll pay the MIP for the entire loan term.

Are there other ways to save for my down payment?

Down payment assistance programs also may be available from state or local housing finance agencies. On average, buyers receive from $5,000 to $20,000 in assistance, depending on the program and state of residence. For example, through the Virginia Housing Development Authority, first-time homebuyers can receive grants of up to 2.5 percent of the purchase price of the home, which does not have to be repaid. To be eligible, homebuyers must meet certain income limits and credit score requirements.

How much does this reduce my costs?

The savings with a lower down payment loan are substantial: To purchase a $300,000 home, you would need $60,000 for a 20 percent down payment. Switching to a 3.5 percent down payment requires $10,500: $49,500 less than for a 20 percent down payment loan.

As you can see, there are many options, but also many variables. Everyone’s situation is different. A qualified mortgage consultant at Prosperity Home Mortgage, LLC, can help you through the process of finding the right loan for your needs.

 

 

 

Note: Low down payment options may not be the best option for all borrowers. Consult your mortgage consultant to review potential loan scenarios and financing options to determine the home loan that is right for you. All products listed are for primary residence financing only.

All first mortgage products are provided by Prosperity Home Mortgage, LLC. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Licensed by the NJ Department of Banking and Insurance.  Licensed by the Delaware State Bank Commissioner.  Also licensed in District of Columbia, Georgia, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.

NMLS ID #75164 (NMLS Consumer Access at http://www.nmlsconsumeraccess.org/)

©2016 Prosperity Home Mortgage, LLC. All Rights Reserved.


The Home-Buying Equation

Sep 15
11:10
AM
Category | Prosperity News

Purchasing a home as a first-time buyer—or even as a repeat buyer—can seem daunting. One way to help alleviate the process is to organize your finances before embarking on the house hunt. Unsure how to get yours in order? Remember A + B + C + D + E:

Ask + Budget + Check + Differentiate + Estimate

Before you start searching for a home, ask a real estate professional for guidance. He or she will have expertise related not only to your local real estate market, but also how to negotiate a deal in your favor.

Next, set a budget that takes into account your down payment, your anticipated monthly mortgage payment (with interest), and your closing costs. These figures are important considerations in the home-buying process, and if you have any questions, a local mortgage consultant can be a good resource to help you get started.

Prior to house-hunting, check your credit report and score. Your credit is a factor in a lender’s approval decision for your mortgage loan application, as well as your mortgage interest rate. Take steps to correct any errors on your report, or improve your score, if necessary.

Shop around for mortgage lenders to differentiate between loan offerings—a variation in rates or terms can lead to significant savings over the life of your loan. Your real estate professional may recommend a few lenders, but it is ultimately your choice with whom to obtain a mortgage.

Estimate oft-forgotten homeownership-related expenses, such as your monthly homeowners insurance premium, your maintenance costs, your moving expenditures, your property taxes and your utility rates. These can all play a role in your overall affordability.

Completing A, B, C, D and E will not only help prepare you for the home-buying process, but also lay a strong financial foundation for you as a new homeowner. And when you’re ready to apply for a mortgage loan, check out these additional tips to help the application process go smoothly!
 

 

 

Reprinted with permission from RISMedia. ©2016. All rights reserved.

All first mortgage products are provided by Prosperity Home Mortgage, LLC. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Licensed by the NJ Department of Banking and Insurance. Licensed by the Delaware State Bank Commissioner. Also licensed in District of Columbia, Georgia, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.

NMLS ID #75164 (NMLS Consumer Access athttp://www.nmlsconsumeraccess.org/)
© 2016 Prosperity Home Mortgage, LLC. All Rights Reserved.


5 Refinancing Tips You Can't Afford to Ignore

By Keith Loria

 

It’s no secret that the past couple years have been an opportune time to refinance a mortgage as mortgage rates were hitting historic lows. In fact, according to the Mortgage Bankers Association, the average interest rate on a 30-year fixed-rate mortgage was 3.49 percent near the end of July, down from 4.2 percent at the same time last year, and 3.9 percent from January.
 
Not only can refinancing a mortgage save you money, it can also help you pay off your home quicker, and will even unlock more equity in your home.
 
If you’re looking to take advantage of today’s low mortgage rates, keep the following items in mind, as they may jeopardize the process.
 
1. Waiting too long. While rates have been low for some time now, with some experts predicting they’ll go even lower, the upcoming election may lead to unpredictability. With low rates like the ones we’re seeing today, time is of the essence, so be sure to refinance sooner rather than later.
 
2. Not being prepared. When your lender calls or emails asking for information, don’t put it off. Have your documentation and financial information ready so that you can sign it in a timely manner. The last thing you want to do is plan to refinance your home when you’re going to be out of town on vacation, as this will most likely keep you from being able to get everything in place before you’re out of pocket.
 
3. Not shopping around. Even if you’re happy with your current lender, it doesn’t mean that you need to stay with them. Shop around and make sure you’re getting the best deal out there. Even a little difference in rates can save a lot of money over the course of a mortgage. If you find a better deal, let your lender know. They may even be willing to match.
 
4. Adding to your loan term. When faced with refinancing, some people decide to add to the number of years of their loan term, lowering their monthly payments, but increasing the total amount of interest over time. Conversely, lowering the terms by five or 10 years can save you a lot, so if you want to change the years, make it lower.
 
5. Forgetting closing costs. When you refinance a home loan, it’s important to remember that you’ll most likely have to pay closing costs, including a loan application fee, appraisal fees, title fees and attorney’s fees. Be sure you have this money on hand.
 
By making smart decisions, your refinancing can be a smooth experience.
 

 

To learn more about refinancing, contact us today.

 

 

Reprinted with permission from RISMedia. ©2016. All rights reserved.

All first mortgage products are provided by Prosperity Home Mortgage, LLC. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Licensed by the NJ Department of Banking and Insurance.  Licensed by the Delaware State Bank Commissioner.  Also licensed in District of Columbia, Georgia, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.

NMLS ID #75164 (NMLS Consumer Access at http://www.nmlsconsumeraccess.org/)

©2016 Prosperity Home Mortgage, LLC. All Rights Reserved.


What Makes a Homeowner Happy?

Jul 27
10:56
AM
Category | Prosperity News

What makes a homeowner happy? A safe community? A short commute? What about walkability? The answer is all of the above, according to HomeAdvisor.com’s recently released Homeowner Happiness Index, an industry indicator ranking the happiest cities in the nation.

“A homeowner’s quality of life is more likely to be dependent on their community and access to important attractions and services than it is on the number of bedrooms and bathrooms in their home,” said Dr. Karen Ruskin, HomeAdvisor’s happiness expert, in a statement.

Square footage is indeed less of a factor in determining a homeowner’s happiness, the Index shows. Natural light, on the other hand, is an important consideration—naturally-lit homes tend to appear more spacious.

The Index also reveals a happiness trend among empty-nesters and married couples without children, who reported feeling satisfied more so than other homeowners.

“Empty-nester homeowners feel most connected with their neighborhoods and are most satisfied with the condition of their homes,” Ruskin said. “They have likely settled in a community they enjoy and in which they plan to stay—and they generally have the most economic stability and time available to make their houses happy homes.”

“Our research shows that homeowners are happiest in urban cities with good weather, an active culture, arts scene and higher income levels,” said Ruskin. But homeowners outside of these areas don’t have to capture happiness in a bottle to feel a higher sense of satisfaction. Simple improvements, such as outfitting the home for entertaining, can make a world of difference.

To find out where your city ranks on HomeAdvisor’s Happiness Index, visit HomeAdvisor.com/survey.
 

 


Source: HomeAdvisor.com

Reprinted with permission from RISMedia. ©2016. All rights reserved.

All first mortgage products are provided by Prosperity Home Mortgage, LLC. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Licensed by the NJ Department of Banking and Insurance.  Licensed by the Delaware State Bank Commissioner.  Also licensed in District of Columbia, Georgia, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.

NMLS ID #75164 (NMLS Consumer Access at http://www.nmlsconsumeraccess.org/)

©2016 Prosperity Home Mortgage, LLC. All Rights Reserved.


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