How to Get Pre-Approved/Pre-Qualified For A Home Loan/Mortgage!

A Pre-approval is a letter from a lender saying that a borrower qualifies for a certain loan amount, based on review of the borrower's income and credit history. Pre-approval letters are generally valid for 2-3 months.

There are many important reasons to get pre-approved:

• To Find Out How Much You Can Afford - If you are getting a loan, it is important to get an accurate idea of how much you can afford. You might be able to afford more or less than you think, and you don't want to waste your time looking at homes outside of your price range.
• A pre-approval letter makes your offer much stronger when you finally find your dream home. Sellers do not want to take their home off the market and waste their time if they do not know that you will most likely be able to get a loan. Without a pre-approval, your offer will not be taken as seriously.
• You can contact any lender or local bank/credit union in order to get pre-approved/pre-qualified within a day or so.

Documents you'll typically need to provide to get a pre-approval:

• Your W2 from the past 2 years
• Your paystubs from the past 3 months
• Your tax returns from the past 2 years
• Your checking or savings bank statements from the past 3 months (proof of down payment funds)
• Your statements for all assets (stocks, bonds, retirement accounts) from the last 2 months
• The name and phone number of your landlord (if you are are a renter) or your current mortgage documents if you already own a home
• Your divorcee decree, if applicable
• If you are self-employed: Your business tax returns from the past 2 years, in addition to your year-to-date profit and loss statement, and year-to-date balance sheet
  

The lender will also need to pull your credit report/score for you and any co-borrowers. They will look in your credit report for red flags such as missed payments and high overall debt. Generally, a score over 720 will get you the most competitive mortgage interest rates. 

If you don't get pre-approved, there are a few things you can usually do to help:

Correcting errors on your credit report and/or raising your credit score

Decreasing your overall debt and improving your debt-to-income ratio

Increasing your down payment amount

Feel free to contact me directly at (310) 717-1312 or JamieTian@RodeoRE.com if you have any questions about the home buying process, or if you need me to recommend a few lenders to you.

Please feel free to visit my website at www.JamieTian.com and click the "Search Listings" tab above to search homes for sale!

Average Down Payments Are Decreasing! The Return of 10% Down Payments!

(Credit: LendingTree)

Around the country, the average down payment amount is decreasing and have dropped an average of about 9.2%. 

Many lenders are allowing homebuyers to put 10% down or less! This can actually be advantageous to homebuyers who are trying to save to reach 20% down payment because while they are saving, interest rates and home prices are going up.

Consider this hypothetical situation:

If you put 10% down on a house that costs $200,000 now and secure a 4% interest rate, then you will pay $384,365.11 over the life of the loan.

However, if you wait a few years to save to put 20% down on the same house, which we project to be now worth $225,000, and secure a 7% interest rate, you will end up paying $455,613.79 over the life of the loan. This is an additional $200 per month for 30 years, a total of $70,000 more.

(See Zillow for more information: http://homes.yahoo.com/blogs/spaces/puts-20-down-house-not-nearly-many-might-175056896.html#more-id)

If you are considering purchasing a home and have not saved up 20% for your down payment yet, don't hesitate to talk to some mortgage brokers, lenders, and real estate agents about your options! You may be closer to getting your dream home than you think.

Feel free to contact me directly at (310) 717-1321 or JamieTian@RodeoRE.com with any questions or concerns. I would be happy to recommend to you a few lenders, or send you a list of available properties that fit your search criteria.

Lack of Inventory Makes for the Perfect Seller's Market! Mortgage Rates Still Low for Buyers!

In today’s marketplace, the lack of inventory is making it the ultimate seller’s market, especially with these all-time low mortgage rates. For the last year, we have been experiencing record low inventory levels. 

Compared to 2011, inventory levels are down 51.5 percent. In April 2013, we saw inventory levels down 21 percent from April 2012. According to a recent analysis, total inventory across 38 major cities declined. As expected, the lack of homes on the market has pushed the list price per square foot of available homes upward. 
    
This is really a sellers’ market and many buyers are facing difficulty with finding homes due to the lack of inventory. Prices are higher, and we are seeing all-cash offers as well as multiple bidding wars. While this is not as good news for home buyers, the lack of inventory benefits home sellers. Having fewer homes on the market increases buyer competition, and typically increases the value of homes.

It really is a great time to sell and you can create a bidding frenzy if you price your home right. If you are looking for a home to purchase, it is more important than ever to have a great buyer's agent to represent you throughout the transaction. The good news is that mortgage rates are still low and it is still a good time to buy. Many experts are predicting mortgage rates to increase through the rest of the year. Although buyers may not get the first property they bid on, they should continue searching for the perfect home!

Please feel free to contact me at (310) 717-1321 or JamieTian@RodeoRE.com if you have any real estate related questions or concerns regarding selling or purchasing your home. I would be happy to provide a professional estimate of your home value at no obligation or assist you in finding your dream home!

15 year mortgage rate vs. 30 year mortgage rate

Mortgage Interest Rates: What to Expect Moving Forward in 2013!