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Tuesday, 12 September 2017 15:46

Prequalification vs. Preapproval

If you’re a first-time homebuyer or if it’s been a while since you’ve purchased a home, you likely have a lot of questions about the mortgage process. Indigo Mortgage is always here to provide information and expert advice on all mortgage related topics. One thing that many people ask us about is the difference between prequalifying for a loan, and getting preapproval on a loan. These are two very different things.

Prequalification: When a borrower wants to prequalify for a mortgage, they submit a full mortgage application. The lender will then pull a credit report and collect income verification, such as bank statements. The lender will then analyze that information and, if it meets all criteria, the lender will issue a prequalification. This will give the borrower an idea of the mortgage amount they’re eligible for.

Preapproval: The preapproval process goes further than prequalification. All financial information collected from the borrower in the prequalification process is submitted to an underwriter. The lender will then be able to tell the borrower exactly how much they qualify to borrow. When you are preapproved for a mortgage, you will receive an exact loan amount in writing, so you can look for a home at or below that price level. This can make your home-shopping experience so much easier. In a competitive market, it may also give you an advantage if the home you love has multiple offers, because your financing is already assured.

When you’re shopping for a home, call Indigo Mortgage for your prequalification or preapproval.

Published in Blog
Wednesday, 13 January 2016 17:34

KKOB on January 12th

Understanding the Pre-Qualification Process

Published in Radio

Typically, the start of the new year is when people begin to look for a new home, so it’s a great time for Indigo Mortgage to talk to you about the mortgage pre-qualification process in detail so you know what to expect.

Most lenders today consider a pre-approval to be giving the borrower an answer as to whether or not they are qualified, what their rate will be, and a list of closing costs. That part of the pre-qualification is only half of what borrowers actually need. The pre-qualification should also cover just how the total payment is derived.

There are 4 factors that go into a total monthly payment: The principal and interest payment, the homeowner’s-insurance payment, property taxes, and if they are putting down less than 20 %, you will also have mortgage insurance. Additionally, the borrower would benefit if they understood the total closing costs involved in the loan, who pays what, and if there are lender credits involved.

Many of the first-time home buyers Indigo Mortgage talks to have been pre-qualified with other lenders, and did not know anything about their mortgage or closing costs; they just knew what their rate was and that they were pre-qualified. Indigo Mortgage always puts home buyers through a home-buyer’s seminar, whether they are a 1st-time buyer, or a prior homeowner who just needs a refresher. This way, the borrower can feel confident that they understand the whole purchase transaction and are equipped to put in an offer.

Because the pre-qualification is only the start of the purchase process, it’s important to use a local lender to be accountable to the borrower and realtor on a moment’s notice, and to provide timely answers. Once the loan is in underwriting, it’s important that the borrower talk to someone familiar with their loan every time they call, and they can simply drop off all paperwork at the local office. None of this is possible with an out-of-state lender or big bank.

If you have any questions regarding the home-buying process, or are ready to get started, contact us at Indigo Mortgage, your friendly, local lender.

Published in Blog
Tuesday, 10 February 2015 17:23

What To Expect During Mortgage Pre-Approval

Many borrowers don't understand the whole pre-approval process. It is common for individuals to approach the application process with one question- what will my rate be? But this is only one half of the process.

Published in Blog
Saturday, 22 November 2014 17:28

KKOB November 19

Staying Local Has Great Benefits!

Published in Radio
Friday, 11 April 2014 20:23

KKOB on April 11

The Veteran's Mortgage Cash-Out Program is Coming Back!

Published in Radio
Tuesday, 08 April 2014 19:46

KKOB on April 8

Your Market Update on Interest Rates

Published in Radio
Tuesday, 18 March 2014 19:30

KKOB on March 18

Borrow Pre-Approval Process-- Know Exactly What to Expect.

Published in Radio
Wednesday, 18 December 2013 17:03

The Importance of a Local Mortgage Pre-Approval

Out of state lenders including big-name banks may take local mortgage applications, but they process and underwrite those loans out-of-state. Once the application is completed, that loan is then transferred out of state. Because of this, many borrowers are faced with impersonal, cumbersome and untimely response times.

Here’s an example of the difference Indigo Mortgage provides as a locally-owned mortgage broker serving all of New Mexico. We recently had a young man come in for a pre-approval; he was comparison shopping to see if he could get a better rate than from a big bank. He’d already been pre-qualified by a big bank; they gave him an interest rate and that was it. We not only gave him a buyer’s seminar so he was more knowledgeable about the home buying process, but we were able to give him a better rate, which will save him thousands over the life of the loan.

Another borrower came in and said he thought the lender he’d applied with was local but found out they are out of state. They took his application locally, sent his file out and then he got an email telling him he was denied, but with no explanation why. He called Indigo Mortgage and we were able to work with him and get him approved. We took the time to meet with him personally and ask some important information that hadn’t been included with his big-bank application.

Even after the pre-approval process, staying local is smart because the realtors’ involved in these transactions need timely responses from the lender. When it’s time to put an offer in on a property, the real estate agent cannot do so without a pre-approval letter from the lender. Many times it’s hard for the borrower to get that pre-approval letter in a timely manner from their out-of-state company which could lead to a missed opportunity on your dream home.

Using a local lender also allows the borrower the convenience of dropping off documents at our office where we’ll make all copies instead of the borrower having to chase down a copier and scanner or fax machine.

Published in Blog
Tuesday, 19 November 2013 16:19

Home Buyers' Education and Pre-Qualification

Today I want to discuss the importance of utilizing a home buyers’ educational seminar before buying a home.

The main things lenders look at are credit score, income, and source of down payment. Pre-qualifications can take as little as 10 minutes to perform depending on the borrower’s situation. Most lenders today will simply advise the borrower weather they are qualified and for how much, but this is a huge disservice to any buyer if they stop there. A pre-qualification should be much more in depth so that the potential home buyer is educated on many aspects of home buying.

The pre-qualification should include education on what makes up the complete monthly payment, including principle and interest payment, home owners insurance, property taxes, and mortgage insurance. The lender should also cover the complete closing costs and what a buyer should expect to come to the closing table with.

I have met with several purchase buyers who originally called Indigo Mortgage to compare interest rates and found that none of the other lenders even bothered to put these buyers through a home buyers’ seminar. Indigo mortgage offers all home buyers, whether they are a first-time buyer or not, a one-on-one session to educate them on the home buying process from A to Z.

Completing an educational seminar may be difficult to accomplish if buyers are utilizing an out of state or online lender. A borrower can get a home buyers seminar from an on-line or out of state lender, or even a large bank for that matter. Unfortunately, these online and out of state lenders are in it for the profit only and don’t really care whether a borrower is educated on the home buying process. As always, I encourage all home buyers to use a trusted local lender, someone like Indigo Mortgage.

Published in Blog
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