Blog : Home Buyer Tips

Why You Should Get Pre-Approved Before Looking for a Home

Why You Should Get Pre-Approved Before Looking for a Home

& How to Get Comfortable Talking to Mortgage Lenders

If you’re considering buying a home, you may wonder whether you should get pre-approved for a mortgage before you start looking for one.

While it’s common to look at homes before securing financing, you receive several benefits when you get pre-approved for a mortgage prior to shopping for your new home.

Finances are often one of the biggest hurdles for first-time homebuyers, and the thought of disclosing bank statements, credit scores, tax records and other financial information with mortgage lenders can be intimidating.

The Erica Rawls Team believes our home buyers are placed in the strongest position when they get pre-approved for a mortgage prior to shopping, especially when they know they may expect some issues to arise during the process.

So, to help potential homeowners become more comfortable talking with mortgage lenders about their finances, the Erica Rawls Team sat down with Angie Shaw, branch manager and loan originator at Fidelis Mortgage, to learn:

  • Why first-time homebuyers are hesitant to talk to lenders about their finances
  • Why so much paperwork is needed when getting a mortgage
  • Why mortgage lenders request bank statements & what they look for in them
  • Who underwriters are and what happens during the underwriting process
  • & much more!

So, Let’s Get Comfortable Getting Uncomfortable With Mortgage Lenders About Finances

As a first-time homebuyer, you may be nervous at the thought of sitting in front of a lender and having your credit score pulled, especially when it can determine your eligibility for something you really want — like a house.

Your credit score is one of the most important factors that will come into play when buying a home.

According to Angie, first-time homebuyers are hesitant to reveal their credit score to mortgage lenders for several reasons, such as:

  • They are nervous or insecure about what their credit score looks like
  • They are not monitoring their credit score
  • They have never pulled their credit score and they have no idea what it is

“Pulling your credit score is the first step to determining what we can do for you, and what kind of programs you qualify for,” Angie said.

There may be programs you qualify for and lenders can find that out upfront. You could think you owe a certain amount for your closing costs, but because a lender has collected your documentation, they might uncover that you qualify for some grant money, she explained.

Even if you attempt to obtain pre-approval for a mortgage and you are denied because of your score, or other factors, you can still obtain a house with a plan in place, our Realtor/Buyer Specialist, Sheena Lansanah, explained.

As real estate advisors, we want future home buyers to know you can talk to a lender without making a commitment on a home. You may know you want to buy a home, but you don’t have a plan for getting it, so it’s perfectly fine to talk to a lender before contacting a realtor. When you meet with the lender, you can simply have a conversation to learn what you can get pre-approved for.

If you don’t receive pre-approval at that time, it doesn’t mean it’s a “no” forever. Lenders can put you on a program to help you get to the point where your score is in a good place, Angie explained.

Why Is So Much Paperwork Required to Buy a House?

The amount of paperwork needed to purchase a home may seem daunting to you, but it’s necessary because of fraud.

People across the country — even if it’s only a small minority — try to create fake documents for others or themselves, and the U.S. Department of Housing and Urban Development (HUD), U.S. Department of Veterans Affairs (VA) and conventional underwriters are all under pressure to prove the information home buyers provide in their application is accurate, Angie said.

To cut down on paperwork, some lenders have docless options where you allow them to verify your information electronically by signing into your bank account.

For many, this method may feel like an invasion of privacy, but it’s not. You’re only signing in to authorize the bank to provide the lender with the information they need. You’re not giving out your username or password.

To get pre-approved for a mortgage, if you receive a regular W-2, you can expect to submit the following documents

  • W-2’s for the last few years
  • 1-2 months of recent pay stubs
  • Bank statements for the last 2 months
  • Tax returns for the last 1-2 years

If you pay or receive child support, have a divorce decree, or already own a home, additional documentation will be required.

“The reason why we want that information upfront is so that we can give you the most accurate pre-approval and put you in a program that best suits your lifestyle and your family’s needs,” Angie said.

Consider this analogy.

When you go to your doctor to receive a medical diagnosis, you have to provide your complete medical history, get exams — some that may be uncomfortable, even awkward — and fill out several pages of paperwork. You do all of this so your doctor can provide you with a complete and accurate diagnosis.

As our realtor Sheena put it, “When we know every piece of the puzzle we can definitely advise you in the best way possible. Once you know where you are, you know where you are going —”

“ — and that empowers you,” Angie added.

If you want to go house shopping with the Erica Rawls Team we believe in talking with a lender first because we truly believe in being properly prepared when purchasing a home.

Could you imagine going house shopping and falling in love with a home only to find out you can’t make an offer on it ? — for whatever reason.

That’s more disappointing than giving up all of your tax and financial information.

One of our responsibilities as realtors is to guide you properly to ensure you have all the tools necessary to make the best investments and decisions — whether it’s the money or the pre-approval you have — so you know everything before making that huge decision.

“Giving that paperwork and documentation upfront can really avoid heartbreak and at pain at the end,” Angie said. “The reason why we ask for a comprehensive list is so that we prepare your life, uncover anything we may not have talked about initially so that you’re not two weeks before settlement and we find out there’s an old tax lien somewhere in another county or state, and it never came up in our search.”

“We’re not judging how much you spend a month, if you go to Starbucks every day, or if you go out to eat every night. We don’t care about that,” she said.

What’s Involved in the Home Mortgage Underwriting Process?

When going into the home mortgage pre-approval process as a first-time homebuyer, you may experience fear of the unknown, particularly when it comes to not understanding what happens in the underwriting process.

You also want to know the personal and financial information you provided ends up in the right hands and remains secure.

We can tell you, as a loan originator, Angie is required to be licensed to take all of your personal information, pull your credit, and determine what program you qualify for in order to structure the mortgage from there. Then, your information is sent to a processor who examines the supporting documents, that were previously reviewed, before submitting them to an underwriter.

The underwriter has designations through HUD, Fannie Mae, Freddie Mac, VA, USDA, or the Federal Housing Administration (FHA) that allows them to underwrite a certain type of loan, like an FHA mortgage loan.

In the home buying process, an underwriter’s role is to audit your documents to determine you have the ability to pay back the mortgage

Underwriters follow processes to make sure the mortgage meets their underwriting guidelines for their designation, whether it’s for HUD, FHA or conventional. They run programs behind the scenes to check if there’s anything odd out there that wasn’t disclosed — not purposely, but we are going over a lot of information upfront and there are times clients forget about past obligations thinking they have been resolved, Angie explained.

The underwriter is the final decision maker, and signs your loan documents — and they are also the ones on the hook if your loan goes bad, too!

So, What Do Underwriters Look for In Your Bank Statements?

According to Angie, when reviewing your bank statements, underwriter’s look for the following potential red flags:

  • Large Deposits: If you have a side business and often make large cash deposits, underwriters will ask where the money came from. They want to be sure all funds must be sourced and accounted for when using the money to get a mortgage.
  • Changing Jobs More Than 3 Times in One Year: If you start a new job every three months that’s considered a red flag because it can make you look inconsistent. This, however, does not apply to freelancers or individuals who are self-employed. If you fall into one of those categories, your income is calculated differently. It’s important for freelancers and entrepreneurs to show they are making money along with two years of their tax returns.
  • Inaccurate or Inconsistent Information: Because they are auditing your financings and ability to pay back the mortgage, they need to verify the information submitted in your application is accurate and aligns with your bank statements.

Should You Get Pre-Approval For a Mortgage Before Looking For a House? Yes, It Benefits You!

When you get pre-approved for a mortgage before you start looking for a home, you can look securely knowing that if you write an offer you will go to the closing table.

And, if you’re not approved right away that’s okay! We will work with you to get you there.

“What’s great about Erica’s team is that I’ve been with them where we worked [with clients] for a year. We do not mind putting in the time. If we give you a plan and you’re sticking to it, they will stick with you and they will be there at the end when you finish the plan,” Angie said.

Are You Looking for A House Nearby? Contact The Erica Rawls Team Today!

If you’re ready to take the next steps to purchase your new home, complete our online form or give us a call at 717.409.6500 to contact the Erica Rawls Team online today!

4 Keys to Buying a Home in Today’s Market

4 Keys to Buying a Home in Today’s Market

After a few months of thinking it over, you’ve finally made the decision to purchase your first home.

You picture the process to be fairly simple: find a realtor, tour a few homes until you find your dream home, obtain a mortgage, and then you have your new home,right?

Not exactly.

You meet with your realtor and view a few homes, but the houses you see don’t match up to what you imagined your forever home for your family would be. 

Because you’re ready to buy your first home, you feel annoyed and frustrated at the process. Then, it happens. Your realtor shows you a house for sale that meets all your requirements, but it has several competing offers. 

Your realtor says you need to be ready to make an offer to the seller soon so you don’t lose the property, and to have the best chance you should not ask for a seller assist.

Reality sets in, and you quickly realize you are nowhere near as ready to purchase a home as you initially thought, especially from a financial standpoint. 

It’s not uncommon for first-time home buyers to reconsider once they realize they may have to compete for a home and don’t fully understand what financial considerations are taken into account at that point in the home buying process. 

Fortunately for you, Erica Rawls Real Estate Advisors know buying a home can be complicated, and our job is to make it as simple as possible for you. 

To help first-time home buyers and others who are looking for a new home, we’ve shared four key things you need to know before buying a new home in today’s market. 

1. Save As Much Money As You Can Toward The Total Purchase Price

That’s right. The most important thing to do you can do when buying a home is saving money.

You may be afraid of not knowing exactly how much money it will cost to buy your new home, but if you have enough saved toward it, when the time comes, you will have a better chance at getting your home.

Here’s Our Tip: Have at least 7 % of the total purchase price saved. This amount includes the down payment, closing costs, and may not may not include money for future repairs and furniture.

Now, you may be thinking how much money is that? Let’s break it down with this example.

Let’s say the home you want costs $100,000, and you have to put a 5% down payment toward the cost, which would be $5,000.

You also need to plan for closing fees, which you can expect to pay, on average, 3% of your home’s purchase price, so that would be $3,000. Then, you know you want to have $3,500 saved for future repairs and furniture.

In this case, you’d ideally want to have $11,500 saved at a minimum ($5,000 + $3,000 + $3,500) to include the down payment, closing costs and repairs/furniture. 

You would only need about $7,000-$8,000 if you want to save 7% without factoring in future repairs or furniture.

If you’re in a competing offer for a home you don’t want to be in a position to ask for seller assistance, which can risk your chance of getting the house. 

Here’s a real-life scenario where having enough money saved benefited the potential buyer in a competing offer.

Our team worked with a millennial who saved $20,000 toward their dream home,which was between $130,000 – $150,000. When the millennial found out there was a competing offer, they told the seller they could make a $10,000 earnest money non-refundable deposit with no seller assistance — the millennial won the offer!

The amount of money you save is going to make or break you in today’s market, so save as much as you possibly can.

You may be thinking, I already have so many other bills and obligations, how can I begin to save for a home?

Don’t get discouraged.  Here are a few tips to help you with saving for your dream home 

  • Tip 1: Don’t make any large purchases, including furniture, until AFTER closing! Keep your focus on the down payment and closing costs.
  • Tip 2: Save a portion of money from your tax return! The beginning of the year is a great time to start a new savings plan. Jump-start your savings using your refund.
  • Tip 3: Find a program that will help you pay for your closing costs. There are even some programs will pay up to 100% of the costs!

2 . Understand Your Credit Score And/Or Work Toward Improving It

Aside from saving money toward the down payment and closing costs, your credit score is another important factor that you need to consider when purchasing a home in today’s market. 

If you know the importance of having a good credit score to buy a car, then you understand how imperative a good credit score will be for buying a new home. 

The higher your credit score is, the less risky you will appear to the lender. You will also have a lower interest rate on your mortgage over the life of the loan, which saves you money long-term. 

You may be wondering, “What credit score do I need to buy a home?”

Here’s Our Tip: Reach for a minimum of a 740 middle credit score across all three credit bureaus so you will have the most favorable terms available to you.

It’s possible to purchase a home with a credit score lower than 740, such as a 640 or 680, but you will pay at least one percentage point higher in interest, which is a significant amount of money over the life of a loan. 

There are some programs that may allow you to purchase a home with a score of 580 — we do not recommend going this route!

We want you to be financially successful when it comes to purchasing a home so you become a successful homeowner. 

If you’re credit score is not where you’d like it to be, work on ways to improve your score before you enter the home buying process. 

“What if I can make a big down payment? Does my credit score matter then?”

Your credit score doesn’t matter if you pay in cash. Otherwise, yes, it’s still a factor, even with a large down payment. 

If you make a larger down payment it will not fix a poor credit score. The down payment will only reduce the amount of the loan you will need. 

For example, the house you want is $250,000 and you qualify for a $150,000 mortgage. You can still get the home if you have $100,000 in cash to pay it off. 

3. Have and Maintain a Steady Job For At Least 2 Years

One thing lenders review when considering whether to grant you a mortgage is whether or not you have a steady income. 

Lenders like to see at least two years of employment when they’re considering you for a mortgage. They will review at least two years of your tax returns — whether you receive a W-2 from an employer or work as an independent contractor. 

Here’s Our Tip: If you’re considering leaving a job, wait until AFTER closing.

Lenders understand if you’re working in a position where you’re going from one job to another in the same field that would be considered a promotion, but it still makes the closing process more difficult with additional paperwork to file. 

4. Assess Your Finances – Can You Really Afford the Monthly Mortgage Payment?

The last thing to consider when buying a home in today’s market is how much you can actually afford to pay for your mortgage each month. 

Once you’ve saved the money for your closing costs, boosted your credit score to the ideal range and established you have a steady income, you need to determine how much you can afford for your monthly mortgage payment.

Just because you qualify for a certain mortage doesn’t mean you have to take it. If you qualify for a $250,000 mortgage but know you can’t afford more than $1200/month for a mortgage payment, you may consider taking a $150,000 mortgage instead.

Here’s our tip: Create a list to determine all of your monthly bills and expenses. This can give you an idea for how much you can afford each month for your mortgage.

You know your monthly financial obligations and personal desires better than anyone else. In your list factor things such as how much you shop, spend on bills, potential vacations, children’s expenses (if applicable), etc. 

Contact Erica Rawls Real Estate Advisors Team Today!

If you’re ready to take the next steps to purchase your new home, complete our online form or give us a call at 717.409.6500 to contact the team at Erica Rawls Real Estate Advisors today!

Homeownership Will Always Be a Part of the American Dream

Homeownership Will Always Be a Part of the American Dream

On Labor Day we celebrate the hard work that helps us achieve the American Dream.

Growing up, many of us thought about our future lives with great ambition. We drew pictures of what jobs we wanted to have and where we would live as a representation of a secure life for ourselves and our families. Today we celebrate the workers that make this country a place where those dreams can become a reality.

According to Wikipedia,

Labor Day honors the American labor movement and the contributions that workers have made to the development, growth, endurance, strength, security, prosperity, productivity, laws, sustainability, persistence, structure, and well-being of the country.”

The hard work that happens every day across this country allows so many to achieve the American Dream. The 2019 Aspiring Home Buyers Profile by the National Association of Realtors (NAR) says,

“Approximately 75% of non-homeowners believe homeownership is part of their American Dream, while 9 in 10 current homeowners said the same.”

Looking at the number of non-owners, you may wonder, ‘If they believe in homeownership, why haven’t they bought a home yet?’. Well, increasing home prices and low inventory can be part of the reason why some haven’t jumped in, but that does not mean there is a lack of interest. The same report shows the increase in the desire to buy in the last year (as shown in the graph below):Homeownership Will Always Be a Part of the American Dream | Simplifying The MarketAs we can see, there are more and more people each quarter who want to buy a home. The good news is, as more inventory comes to the market, more non-homeowners will be able to fulfill their dreams. Finally, they’ll be able to move into that home they drew when they were little kids!

Bottom Line

If you’re a homeowner considering selling, this fall might be the right time, as there are buyers in the market ready to buy. Let’s get together to determine how you can benefit from the pent-up housing demand.

5 Real Estate Reality TV Myths Explained

5 Real Estate Reality TV Myths Explained

Have you ever been flipping through the channels, only to find yourself glued to the couch in an HGTV binge session? We’ve all been there, watching entire seasons of shows like “Property Brothers,”Fixer Upper,” and “Love It or List It,” all in one sitting.

When you’re in the middle of your real estate-themed TV show marathon, you might start to think everything you see on the screen must be how it works in real life. However, you may need a reality check.

Reality TV Show Myths vs. Real Life:

Myth #1: Buyers look at 3 homes and decide to purchase one of them.
Truth: There may be buyers who fall in love and buy the first home they see, but according to the National Association of Realtors, the average homebuyer tours 10 homes as a part of their search.  

Myth #2: The houses the buyers are touring are still for sale.
Truth: Everything is staged for TV. Many of the homes shown are already sold and are off the market. 

Myth #3: The buyers haven’t made a purchase decision yet.
Truth: Since there is no way to show the entire buying process in a 30-minute show, TV producers often choose buyers who are further along in the process and have already chosen a home to buy. 

Myth #4: If you list your home for sale, it will ALWAYS sell at the open house.
Truth: Of course, this would be great! Open houses are important to guarantee the most exposure to buyers in your area, but they are only one piece of the overall marketing of your home. Keep in mind, many homes are sold during regular showing appointments as well. 

Myth #5: Homeowners decide to sell their homes after a 5-minute conversation.
Truth: Similar to the buyers portrayed on the shows, many of the sellers have already spent hours deliberating the decision to list their homes and move on with their lives and goals.

Bottom Line

Having an experienced professional on your side while navigating the real estate market is the best way to guarantee you can make the home of your dreams a true reality.

The Benefits of Growing Equity in Your Home

The Benefits of Growing Equity in Your Home

Over the last couple of years, we’ve heard quite a bit about rising home prices. Today, expert projections still forecast continued growth, just at a slower pace. One of the often-overlooked benefits of rising home prices is the positive impact they have on home equity. Let’s break down three ways this is a win for homeowners.

1. Move-Up Opportunity

With the rise in prices, homeowners naturally experience an increase in home equity. According to the Homeowner Equity Insights from CoreLogic,

“In the first quarter of 2019, the average homeowner gained approximately $6,400 in equity during the past year.”

This increase in profit means if homeowners decide to sell, they’ll be able to put their equity to work for them as they make plans to move up into their next home.

2. Gain in Seller’s Profit

ATTOM Data Solutions recently released their Q2 2019 Home Sales Report, indicating the seller’s profit jumped at one of the fastest rates since 2015. They said:

“A look at the national numbers showed that U.S. homeowners who sold in the second quarter of 2019 realized an average home price gain since the original purchase of $67,500…the average home seller gain of $67,500 in Q2 2019 represented an average 33.9 percent return as a percentage of the original purchase price.”

Looking at the amount paid when they bought their homes, and then the amount they received after selling, we can see that some homeowners were able to walk away with a significant gain.

3. Out of a Negative Equity Situation

Negative equity occurs when there is a decline in home value, an increase in mortgage debt, or both. Many families experienced these challenges over the last decade. According to the same report from CoreLogic,

“U.S. homeowners with mortgages (roughly 63% of all properties) have seen their equity increase by a total of nearly $485.7 billion since the first quarter 2018, an increase of 5.6%, year over year.

In the first quarter of 2019, the total number of mortgaged residential properties with negative equity decreased…to 2.2 million homes, or 4.1% of all mortgaged properties.”

The good news is, many families have moved beyond a negative equity situation, and no longer owe more on their mortgage than the value of their home.

Bottom Line

If you’re a current homeowner, you may have more equity than you realize. Your equity can open the door to future opportunities, such as moving up to your dream home. Let’s get together to discuss your options and start to put your equity to work for you.

How Much Do You Know About Down Payments?

How Much Do You Know About Down Payments?

Whether you’ve owned a home before, or you’re ready to jump into homeownership for the first time, there are always a lot of questions swirling around about what is truly required for a down payment, and how to best source down payment assistance. Let’s tackle these two today.

1. How much do you really need for a down payment?

There is a long-standing misconception about down payment requirements. A survey from Fannie Mae shows only 17% of consumers know the minimum options are actually between 1 – 5% of the purchase price and 40% don’t know how much they need at all.How Much Do You Know About Down Payments? | Simplifying The MarketThere are many mortgage loans available that require as little as 3% down for first-time buyers, and some ask for only 3.5% down from repeat buyers. There are even loans available for Veterans that provide 0% down payment options too.

We’ve mentioned recently that you don’t need to come up with a 20% down payment to buy, and we’ve also shared how quickly you can save for a 3% or 10% down payment, depending on where you live. If you’re planning to put down just 3%, the research shows it may be possible in most states to have enough saved for a down payment in less than a year. That puts homeownership in a much closer reach for many potential buyers, maybe even you!

2. How can I get help with my down payment?

Regardless of the loans available, many buyers still need assistance with a down payment. The great news is, there are a lot of ways to tap into down payment assistance options. Here are just a couple of them:

Assistance from Family Members

The National Association of Realtors (NAR) said, “a third of recent first-time buyers received down payment assistance from family members.” They also mentioned, “the average net worth of those aged 75 and over stands at $264,800…They just might offer the boost the next generation needs to become homeowners.

That means one of the ways to find help with a down payment is to accept a gift from a family member. If this is an option for you, make sure you talk to your loan officer before you accept the money, to ensure you document the process the way it is required by your loan. This way, it will be received properly and you can still potentially qualify.

Down Payment Assistance Programs

The reality is, not everyone has a loved one or a family member who can provide help with a down payment. There are, however, more than 2,500 down payment assistance programs available (by local areas like city, county, or neighborhood), and some of them are even specifically for first-time buyers.

The gap, as mentioned in the same survey, is “only 23% of consumers are familiar with low down payment programs.”

That’s why it is so important to get familiar with these options by doing your homework before you plan to buy a home. Determine what is available in the area where you ultimately want to live, so you have all the details you need to take advantage of the down payment assistance option that is best for your family.

Bottom Line

If buying a home is one of your long-term goals, you may be able to get there sooner than you think by tapping into one of the many down payment assistance programs available.

Should I Refinance My Home?

Should I Refinance My Home?

With the recent lower interest rates, many homeowners are wondering if they should refinance.

To decide if refinancing is the best option for your family, start by asking yourself these questions:

Why do you want to refinance?

There are many reasons to refinance, but here are three of the most common ones:

  1. Lower your interest rate and payment – This is the most popular reason. If you have a 5% interest rate or higher, it might be worth seeing if you can take advantage of the current lower interest rates, hovering below 4%, to reduce your monthly payment and overall cost of the loan.
  2. Shorten the term of your loan – If you have a 30-year loan, it may be advantageous to change it to a 15 or 20-year loan to pay off your mortgage sooner.
  3. Cash-out refinance – With home prices increasing, you might have enough equity to cash out and invest in something else, like your children’s education, a vacation home, or a new business.

Once you know why you might want to refinance, ask yourself the next question:

How much is it going to cost?

There are fees and closing costs involved in refinancing, and Lenders Network explains:

“If you were to refinance that loan into a new loan, total closing costs will run between 2%-4% of the loan amount.”

They also explain that there are options for no-cost refinance loans, but be on the lookout:

“A no-cost refinance loan is when the lender pays the closing costs for the borrower. However, you should be aware that the lender makes up this money from other aspects of the mortgage. Usually pay charging a slightly higher interest rate so they can make the money back.”

If you’re comfortable with the costs of refinancing, then ask yourself one more question:

Is it worth it?

To answer this one, we’ll use an example. Let’s assume you have a $200,000 home loan. A 4% refinance cost will be $10,000. If you want to lower your interest rate from 6% to 4%,  then refinancing is going to save you $244 per month. To break even ($10,000/$244), you need to continue owning your home for over 40 months.

Now that you know how the math shakes out, think about how much longer you’d like to own your current home. If you plan to stay for more than 3 years, then maybe it is advantageous for you to refinance.

If, however, your current home does not fulfill your present needs, you might want to consider using your potential refinance costs for a down payment on a new move-up home. You will still get a lower interest rate than the one you have on your current house, and with the equity you’ve already built, you can finally purchase the home of your dreams.

Bottom Line

There are many opportunities for growth in the current real estate market. To find out what’s right for your family, let’s get together to help you understand your options and guide you toward the best decision.

Stop Wondering What Your Budget Is & Get Pre-Approved!

Stop Wondering What Your Budget Is & Get Pre-Approved!

In many markets across the country, the number of buyers searching for their dream homes outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show that you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are not in an incredibly competitive market, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you through this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential homebuyers overestimate the down payment and credit scores necessary to qualify for a mortgage. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so today.

Your Tax Refund Is The Key To Homeownership!

Your Tax Refund Is The Key To Homeownership!

According to data released by the Internal Revenue Service (IRS), Americans can expect an estimated average refund of $3,143 this year when filing their taxes. This is down slightly from the average refund of $3,436 last year.

Tax refunds are often thought of as ‘extra money’ that can be used toward larger goals. For anyone looking to buy a home in 2019, this can be a great jump start toward a down payment!

The map below shows the average tax refund Americans received last year by state.Your Tax Refund Is The Key To Homeownership! | Simplifying The MarketMany first-time buyers believe that a 20% down payment is required to qualify for a mortgage. Programs from the Federal Housing Authority, Freddie Mac, and Fannie Mae all allow for down payments as low as 3%. Veterans Affairs Loans allow many veterans to purchase a home with 0% down.

If you started your down payment savings with your tax refund check this year, how close would you be to a 3% down payment?

The map below shows what percentage of a 3% down payment is covered by the average tax refund by taking into account the median price of homes sold by state.Your Tax Refund Is The Key To Homeownership! | Simplifying The MarketThe darker the blue, the closer your tax refund gets you to homeownership! For Pennsylvanians looking to purchase their first home, their tax refund could potentially get them 56% closer to that dream!

Bottom Line

Saving for a down payment can seem like a daunting task. But the more you know about what’s required, the more prepared you can be to make the best decision for you and your family! This tax season, your refund could be your key to homeownership!