SHANTEE HAYNES

In the latest installment of the “Buyer Be Ready” series, is a brief comparison of pre-qualification and pre-approval for a mortgage loan. As many may not think to ask “what’s the difference?”

So here it is, short and sweet. And remember to consult a licensed mortgage professional for further clarification as well as once you’re ready to buy a home and finally attain a loan!

Pre-Qualification is simply having been informed of an estimated or an approximate amount of a mortgage that you should be able to qualify for. It doesn’t commit you to anything and there is no loan amount or interest rate promised, nor is it an in-depth look at your ability to purchase a home. Simply put, there is a bit less of a guarantee that you will get a loan than if you went through the pre-approval (which will be pending while you’re in the active search for a home with an agent). It can take place over the phone or online with you supplying the basics and maybe just a bit of financial information (estimated annual income, home address, how long at residence, etc.). Usually, you can get pre-qualified at sites like Lendingtree.com, or on a bank or lender’s website. Once you’re given the details of pre-qualification, you’re not obligated to proceed with getting Pre-Approved. It is however, a good first step in seeing where you stand in this current market and hopefully a motivator to get you to purchase.

Pre-Approval, is a much more concentrated process, and the necessary first step to buying your home when you’re ready to finally make the move. Undergoing the pre-approval process involves locking in an interest rate and determines what you REALLY can afford. Once you have decided you finally want to own a home, it is best to do in person.

Patrick Hooper of Prosperity Mortgage in Washington, DC simply states:” Pre-Approval is always better. A “pre-qual” is like a car wash; a pre-approval is like a complete car detail!”

In continuing the “Buyer be ready” series here on the Sold in the City DC blog. Our first guest post is from Bill Van Dyke, President at Paradigm Mortgage Services in Bethesda, Maryland.

A question many first time buyers may have is “What is the right loan for me as a first time buyer”? Here, Bill lays out a simple explanation and is available anytime to answer any more questions you may have:

The best loan for a first-time home buyer varies depending on the circumstances of the buyer. How much money does the buyer have for a down payment? What are their credit scores?

An FHA loan requires the least money to buy a property, allows lower credit scores, but has a higher payment due to the mortgage insurance premium (MIP). If the buyer can afford a 5% down payment and has a high credit score, they can get a loan with private mortgage insurance (PMI), which costs less than FHA mortgage insurance.

How long do they plan to own the property? If the plan is to own the property long term, then a 30 year fixed rate mortgage is appropriate. If the plan is to move up or move on, an Adjustable Rate Mortgage (ARM) may be more appropriate. Rates and monthly payments are lower with ARMs.

…If you have any further questions, you can reach Bill anytime:

Paradigm Mortgage Services, Inc.
7272 Wisconsin Avenue, Suite 300
Bethesda, MD 20814
301-941-1992
bill@gotoparadigm.com
www.gotoparadigm.com

I’ve heard it many times from people who were interested in buying “I want to buy a foreclosure”. Which REALLY translates into: “I want a deal”. We all want what we want of course. This is where a bit more education on the buyer’s part that comes in. Not necessarily ‘deprogramming’, but just informing them further that in this market, purchasing a foreclosure isn’t the only way to secure a deal when buying a home in Washington, DC, yet there are some things to consider if one is still heavy on the posiblity of buying a foreclosed preoprty.

A good lead-in, is discussing the concept of cost vs. price with them and how that can tie in to any foreclosure on the market (this is a GREAT concept to discuss when purchasing ANY home, actually). Now a foreclosure can range in condition from move-in ready with not much work needed if any, to ugly/unfortunate and a miracle requiring more money to make it presentable and up to par with what the buyer is looking for, and the kind of loan you and interest rate you have attained. Yes, you can afford the price of the foreclosed property, but are you able to bear the costs it MAY take to live in it? In looking at the asking price of a foreclosed property, particularly one you have REALLY found desirable because it’s in the neighborhood you like, and you have a vision for an end result beyond what its’ current condition is, what are the additional needs to be put into owning it?

Some foreclosures may require new appliances to be purchased, some may require complete rehabilitation of the lawn, perhaps the pipes are corroded and need work…there is so much to consider in the potential costs of buying and eventually owning a foreclosure, as with any kind of property. Not that these should be taken out of your consideration, but there are many factors to consider outside of the assumptive notion one has taken that a foreclosure is the only way to go when considering a financially sound home purchase.

So, yesterday I had a pretty interesting and somewhat productive day on the open house front. I had a little time to kill before meeting a colleague at his open house (he was helping another agent), so I followed the signs to a FSBO open house. I've visited quite a few open houses in the last year or so, and this was the first time I have been to a FSBO. The property was really nice and had great space, not sure if was priced properly for the area where it was, but if it wasn't, I doubt it was priced outrageously!

Well, in my limited experience, I knew right away said homeowner/seller had run out of feet to shoot himself in! Aside from his reluctance to come down in the price (I could tell it in his voice when he answered my question of how much he was asking), he mentioned that he has held and open house EVERY Sunday with no offers since it's been on the market...it's been on the market since MARCH! Now I first shook hands with the gentleman before handing him my card, to let him know I came in peace and not to shake up his harmonious open house he had going on! His next question pretty much informed me what his goal was and why he had the home on the market with no offers..."What about your fees?" Instantly I felt a panic, what word vomit was I going to throw out as to make my first rookie mistake? Well, at this point, I had looked through the property and was pretty much on my way out the door, so knowing this, I chilled and simply smiled. I told him what I could in my limited power and experience. "Well Mr homeowner/seller, it will take looking at some comps among other important elements, but the fees are always negotiable, these can be discussed in a listing presentation where I can also offer you a way better alternative than an open house so we can get QUALIFIED buyers to the property and get people bidding right away...does that sound like something you possibly would be interested in?"

I wasn't met with any resistance as he hadn't been given the "hard pitch" (what do you think?) and I wasn't pushy so as to insist "Gimmie the listing when you FIANLLY wanna sell this house buddy!!"...I offered a solution with a possible alternative...we both ended the 10 minutes with a smile, and my business card had been passed to somone with a need

Ok, so on to the open house with my colleague!! I got a chance to assist a colleague yesterday at an open house. Nothing big, just buzzing in guests and making sure they signed in, that's pretty much it. Of course I was more than happy to observe while my colleague engaged potential clients and interested buyers at the property. Well, when I first walked in, I was greeted by a VERY distinctive smell. Considering this was an open house, you might think that smell was fresh baked cookies? No. Perhaps some potpourri warming on the stove or a scented candle? No sir!

Pet odor!

Yes, both the agent and I had the displeasure of smelling this odor along with doing our best to contain our displeasure that the place wasn't furnished either. This by the way, again, was my colleague doing a favor for another colleague who was not informed by the seller that the place was not furnished, and of course the smell was probably lost on the seller since they lived there with the pets and unfortunately were probably used to the smell. Now, had we not had this experience, I doubt my notion to let potential sellers know what I expect of them would have been solidified...I am now determined more than ever, to ensure potential sellers do their "homework"...even if people coming through to the open house don't buy your property, it should be noted...MR/MISS HOME SELLER YOU'RE BEING GRADED BY WHAT WE CALL WORD OF MOUTH!!! NASTY ODOR=FAIL!!! NO FURNITURE (AND NOT TELLING THE AGENT)=FAIL!!

Someone...anyone...PLEASE tell me you have something a bit less shameful and more interesting from an open house experience!!!

....Please!?

The catch is...you gotta be a blackberry user!!!

I found a cool tool in the Blackberry application store. It's called "Homes for Sale by Smarter Agent". You can search listings and homes for sale by Broker/zipcode...basically like MLS. First you have to have a blackberry (LOL), then you download Blackberry Application World to your phone, go to:

http://uk.blackberry.com/services/appworld/download.jsp#tab_tab_download

Follow the directions to download and install. Once you have done so, go ahead into the icon/app on your phone and go to the search option and type in "Homes For Sale"...it will take you right to the application and give you step by step insturctions to download and install.

I am sure there may be something similar for those who use Iphones (they have meebo for Iphone and not blackberry...darnit!!!) but this is of course for those of us who are loyal to good old blackberry!!

Enjoy!!