Posts Tagged mortgage pre-approval
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Posted by Top Home Loans in Off-Topic on November 28, 2008
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Being Approved is not always a Good Thing
Posted by Top Home Loans in Economy, Mortgage Advice on August 26, 2010
It is said that it is everyone’s dream to own their own home; a place to call their own. However, could home ownership become a nightmare instead of a dream?
Michelle was in love with the dream of owning her own house, so she started, at a young age, taking the steps to home ownership. The first step she took was to get a career and save some money for the down payment. When she was finally prepared to buy a house, she phoned the bank to get a mortgage pre-approval.
The mortgage specialist she spoke with was very nice and personable. The processed seemed to be very easy, and she was able to get all the answers to all the questions that she had. She was advised to make her offer conditional upon financing when she found a house. Michelle had got a pre-approval easily and was ready to go house shopping.
She found a Realtor and went house shopping for a number of weekends. She made an offer in on a home and her offer was accepted by the seller. She was so happy, that she rushed home and called her bank right away.
The mortgage specialist requested a risk of documents that she would need to proceed in order to proceed with the mortgage application. Michelle was able to collect all the documents with ease, and before she knew it, her mortgage was approved.
Everything was ready to go for Michelle.
Once Michelle moved into the property, she ran into many problems. The first problem was that the house needed thousands of dollars of repairs. Michelle didn’t have this kind of money, so she had to borrow it to repair her house. Michelle was finding the mortgage payments difficult to manage as well.
Michelle didn’t have furniture, so she had to buy things for her new house. The fees for this new property were starting to add up. She also found out that she had a tax bill worth several thousand that was outstanding. This needed to be paid right away.
Michelle was forced to charge all these expenses to her credit cards. Before Michelle knew it, she didn’t have enough food to eat. Michelle was living from pay to pay without a surplus.
Michelle, eventually ended up selling the house and going back to renting. Michelle lost over $50,000 on the transaction.
Think about your decision quite a bit before you make the decision. Don’t let others make the decision for you.
Did you lose money on your mortgage? How did you keep your head up? Leave your response in the comments below.
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Your Mortgage Pre-Approval may no longer Valid; Why many Mortgage Pre-Approvals are not Accurate
Posted by Top Home Loans in Mortgage Advice, Mortgage News on April 21, 2010
Pre-approvals are a great way for many home buyer’s to determine how much they can afford on a purchase. The pre-approval does not act as an approval, but it acts as an interest rate hold. The pre-approval is simply a rough estimate on what the borrower can be approved for. The pre-approval has remained fairly accurate for quite some time; however, with the changes in mortgage rules, many home buyer’s pre-approvals are now broken.
For many individuals applying for a pre-approval they meet the following details: they will have 5% down payment, 35 year amortization, and they will set the loan at the maximum borrowing capability. When the borrower purchases for this amount, they would expect to be approved based on their pre-approval; however, since the qualifying rate has changed many 4 year or less fixed rate or variable rate applicants may be out of luck. The reason for this is that when the mortgage qualifying rate changed, the qualifying rate almost doubled. This caused the maximum amount that a borrower could be approved for was reduced by 20% to 25%.
This means that if they make an offer based on the numbers they were provided with their mortgage pre-approval, they would be declined.
How can you protect yourself by making sure that you qualify for the house you are buying? Make sure to contact your mortgage broker, and have them review your pre-approval to make sure that it is up to date. Unfortunately, many brokers have so many clients that they could not dream of following up with them all.
To be certain that your mortgage is approved, make sure that your offer is subject to financing and give your broker at least 5 business days to confirm. This will also give you time to complete your appraisal and inspection on the property.
Did you get a fixed rate or a variable rate pre-approval? Have you had your pre-approval reassessed after the rule change?