Being Pre-Approved is a Must-Have!

In most real estate markets today, if a residential property buyer isn’t fully pre-approved for a mortgage loan, the chances of any seller taking that buyer’s offer seriously is very slim. The reason is probably obvious, but a pre-approval is validation that the loan has been pre-underwritten (or at least it should be), which provides the seller confidence that the transaction will close. In order to become pre-approved, all information submitted on the loan application has to be verified by documentation provided by both the borrower and third parties. In fact, the average file today has over thirty components to validate a loan approval — 30+ components — more than half of which are third party!

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A pre-qualification is nothing more than a discussion around a buyer’s loan qualifications. For example, if one uses the AMB 5X Rule, which states that five times one’s gross annual household income equals the approximate loan amount one qualifies to receive, then we know that a $100,000 salary means that one may be able to afford a $500,000 loan. But then employment, income, assets, credit, obligations and declarations all need to be discussed to refine one’s qualifications. Taking the next step towards validating everything then fully vets a buyer’s true qualifications and approval allowances.

Most importantly, the biggest benefit to the pre-approval process is that it empowers the buyer to execute confidently. Think about it; if one has had a thoughtful, detailed discussion and analysis around the largest loan one will likely have, both short and long-term goals need to be taken into consideration. Questions around future employment, lifestyle, family planning, retirement, cash flow, housing goals, etc. all need to be taken into consideration to effectively pre-approve anyone and get them truly excited about a new property purchase. Doing so benefits both buyer and seller and makes for an ideal transaction.

Contact your favorite Absolute Mortgage Advisor or visit us at www.absolutemortgage.com for more information.

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Another Great Road to Recovery Mortgage Program

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Back in August of 2013 we wrote Buying Today Despite Short Sale Yesterday, which addressed the fact that those who were victims of a recent short sale (less than two years ago) could possibly obtain a mortgage for purchase or refinance, provided certain elements existed.  The elements for success included: 1. No other credit issues, 2. Solid equity/down payment of 30% or more, 3. Solid reserve funds and 4. solid income.  That program has been extremely effective, especially for non-conforming loans; in fact, an existing client is pre-approved for a $2.5mm purchase and the foreclosure occurred only two years ago!

Now, Housing and Urban Development (HUD) has stepped up their game with a similar program, the Federal Housing Administration (FHA) Back to Work Program.  In short, if a borrower lost their home over 12 months ago due to financial hardship and she/he have re-established credit (or maintained otherwise good credit), then they may qualify to get a new mortgage to purchase a home without the standard two to seven year waiting periods required under conventional mortgage programs.  A financial hardship is defined as a loss in income of 20% or more for at least a 6-month period and it must be documented.  The borrower must also document that she/he has fully recovered from the hardship.  Finally, the borrower(s) must attend a credit counseling class prior to submitting an application.  All other FHA requirements apply as well, but the rates are extremely competitive and help to stretch the qualifications of applicable borrowers.

For complete information on this program or any other mortgage program, contact your trusted mortgage advisor at Absolute Mortgage Banking.