Kathy Foran - REALTY EXECUTIVES Boston West



Posted by Kathy Foran on 6/3/2018

If you’re in the market to buy a home, you’re probably learning many new vocabulary words. Pre-approved and pre-qualified are some buzz words that you’ll need to know. There’s a big difference in the two and how each can help you in the home buying process, so you’ll want to educate yourself. With the proper preparation and knowledge, the home buying process will be much easier for you.  


Pre-Qualification


This is actually the initial step that you should take in the home buying process. Being pre-qualified allows your lender to get some key information from you. Make no mistake that getting pre-qualified is not the same thing as getting pre-approved.


The qualification process allows you to understand how much house you’ll be able to afford. Your lender will look at your income, assets, and general financial picture. There’s not a whole lot of information that your lender actually needs to get you pre-qualified. Many buyers make the mistake of interchanging the words qualified and approval. They think that once they have been pre-qualified, they have been approved for a certain amount as well. Since the pre-qualification process isn’t as in-depth, you could be “qualified” to buy a home that you actually can’t afford once you dig a bit deeper into your financial situation. 


Being Pre-Approved


Getting pre-approved requires a bit more work on your part. You’ll need to provide your lender with a host of information including income statements, bank account statements, assets, and more. Your lender will take a look at your credit history and credit score. All of these numbers will go into a formula and help your lender determine a safe amount of money that you’ll be able to borrow for a house. Things like your credit score and credit history will have an impact on the type of interest rate that you’ll get for the home. The better your credit score, the better the interest rate will be that you’re offered. Being pre-approved will also be a big help to you when you decide to put an offer in on a home since you’ll be seen as a buyer who is serious and dependable.  


Things To Think About


Although getting pre-qualified is fairly simple, it’s a good step to take to understand your finances and the home buying process. Don’t take the pre-qualification numbers as set in stone, just simply use them as a guide. 


Do some investigating on your own before you reach the pre-approval stage. Look at your income, debts, and expenses. See if there is anything that can be paid down before you take the leap to the next step. Check your credit report and be sure that there aren’t any errors on the report that need to be remedied. Finally, look at your credit score and see if there’s anything that you can do better such as make more consistent on-time payments or pay down debt for a more desirable debt-to-income ratio.





Posted by Kathy Foran on 4/16/2017

When you get pre-approved for a mortgage, you may be excited to find out that you can afford a lot more house than you thought you could. Don’t be so fast, this is just what you can get a loan for. The bank doesn’t know a lot of factors about your finances. While you most likely had to provide a ton of income verification statements and information in order to get this ballpark figure, relying solely on the pre-approval number can put you in a bind when it comes to your finances. Your lender doesn’t know certain things like how much you spend on groceries or how much your cell phone bill is each month. 


What Lenders Consider


Lenders look at the health of your credit history, how much income you have and how much debt you have. These are the big factors that tell your lender about how much house you can afford. Yet, your home lender is not your financial advisor and can’t help you with household expenses and the like. When thinking about what price range of home you really can afford, consider these factors beyond the bank:


Your Monthly Budget


Your spending habits will ultimately affect your ability to pay the monthly mortgage bill. If you’re spending all of your disposable income, then you may not be able to afford much at all beyond what you’re already paying for rent. You don’t want to stretch your finances so thin that you won’t be able to afford food! 


Owning A Home Requires Additional Costs


Lenders do factor into their number the cost of homeowner’s insurance and property taxes, but don’t consider other things like utility bills, trash pickup and home repairs. All this can certainly add up when you’re a homeowner! 


Your Savings Is Nonexistent


If you’re unable to save any money at all if you’re a homeowner, then you’ll be in trouble. You need money stashed away in case of unemployment or an emergency. You also may be planning for things like retirement and future costs like children’s education. For the initial purchase of a home, you’ll need upfront payments available for the down payment and closing costs. However, you’ll need some more savings beyond that for everything that life brings your way!  


You Have Big Plans


Are you thinking of quitting your job and heading out to start your own business? Now may not be the best time to buy a new house. These changes could have a huge impact on your finances and leave you unable to pay your mortgage. Your lender won’t be asking about these plans, so you’ll need to know what the future holds (for the most part ) in order to keep your own finances secure. 


The bottom line is that anything that could leave you financially stressed is not a good idea. Considering that buying a home is one of the biggest purchases you'll ever make, you want to be sure that you keep your finances in check during the purchase process.  




Tags: mortgage   budgeting   loans  
Categories: Uncategorized  


Posted by Kathy Foran on 5/26/2013

Getting approved for a loan isn't always a good thing. You have to make sure you are a good borrower. What makes a bad borrower? There are several types of loans you should avoid if you don't want to overextend yourself and potentially damage your credit rating. Payday loans Interest rates on pay day loans often run high into the triple digits.  They are designed to be extremely short-term. Pay day loans often put borrowers in a cycle of debt that can be difficult to break because borrower usually can't pay off the original loans and keep returning to the service. Car title loans Borrowing against an asset is usually never a good idea. Most car title loans charge interest with an annual percentage rate of well over a 100 percent and they are generally due within one month. If the borrower can't pay back the loan, the lender will take your car and sell it. Tax refund anticipation loans Another loan with an extremely high interest rate is a tax refund anticipation loan. If you need more money you can change the amount that's withheld from your paycheck. That way you give yourself a raise and the government takes only the amount that's owed. Co-signing a loan Co-signing a loan for someone else has you taking on all of the responsibility of another financial obligation with none of the benefits. Too often co-signers find themselves left with the loan long after the other person on the loan has stopped paying. It usually never makes sense to take on someone else's debt.  




Categories: Money Saving Tips