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Everything to Know About the Pre-Approval Process in Albuquerque

by Sandi Pressley

No doubt, you've already hear about being "pre-approved" if you're planning on buying a home in Albuquerque. Yet many people don't fully understand the process.

What is Pre-Approval?

In short, being pre-approved for a mortgage means that the lender decides if you're eligible for a loan and how much you can borrow. This decision is based on your finances and credit rating.

Why Do I Need to Get Pre-Approved?

Being pre-approved is necessary for a number of reasons. It gives you clearer picture of how much money you need to complete the buying process. The more you put down, the lower your monthly payments will be. You will also get a better idea of how much you can afford for the total price of the home.

Many people make the mistake of thinking that the loan product that a friend used will work the same for them. Even though that's a possibility, it's not safe to assume so. No two loans are alike, just as no two lives and circumstances are alike.

Loan products also have different costs, such as varying lender origination fees. Your loan officer can work with your to learn the costs of a loan and how the loan process works.  This will give you a good idea of what costs to expect.

Knowing these things will make you more comfortable when deciding on a home to buy. It also shows sellers that you're serious about making an offer, giving you an edge over buyers who haven't been pre-approved.

Getting Pre-Approved is Easy

Pre-approval is an easy process, so there's no reason not to do it. You just need to know how much money you make, assets, and debts.

What Will My Lender Need to Check During Pre-Approval?

  • Your credit score. Yes, your lender will then have to pull your credit. Don’t worry, pulling your score once shouldn’t affect your score. 
  • W2s or 1099s
  • Pay stubs
  • Tax returns
  • Bank statements
  • Account statements
  • Your list of monthly expenses

Gathering all these documents can feel like busy work and is typically the hardest part for you. 

If you want to have an idea of whether you’ll get pre-approved before choosing a lender, a good first step is finding out your debt-to-income ratio, or DTI. Your DTI ratio helps a lender understand how much of your monthly income goes to paying debt and what you have left after those debts are paid. You can calculate the ratio by dividing monthly debt payments by gross monthly income.

The lower your debt-to-income ratio is, the better. A lower DTI will make you seem less risky to lenders.

Although each loan product is different, most lenders would prefer your debt-to-income ratio to be at 36% or lower.

Check back on our blog every week for more real estate advice and local articles about living in Albuquerque. And make sure to follow us on Facebook for up to date real estate news for Albuquerque and surrounding areas.

HOT HOME LISTING OF THE WEEK!

1120 Edith Boulevard SE, Albuquerque, NM 87102   $202,000

 

3 Bedrooms / 2 Bathrooms (1 full, 1 partial) / 1413 Square Feet

Welcome this one story Hip cottage, bungalow style, built 1908 in the urban South Broadway Neighborhood. Home features 2 covered porches, historic front faces west and east facing back. Over sized lot for the area, and entire property is fenced. Original wood floors. Home offers 3 bedrooms, and 2 baths. 3rd bedroom currently being used as an office. Newer updates include, ROOF, windows, evaporative cooler. This home is not to be missed!

Contact the Sandi Pressley team for additional details! 

Get your Morning Inspiration with the Sandi Pressley Team

If you have your home on the market, you'll soon be getting offers. When that happens, you'll need to decide which offers are best for you.

Your real estate agent will be a huge help with this. Agents know how to determine the pros and cons of an offer, since there's more to it than just dollar signs. They have a sense of your financial and personal goals, so they can help you decide if the offer being made matches those goals.

Before the first offer rolls in, here’s what you need to know about the offer evaluation process, including the main factors that should go into making a decision with your agent.

When vetting offers, evaluate these areas in addition to price:

The earnest money deposit.

An earnest money deposit, or EMD, is the amount of cash a buyer will pay when the agreement is signed to show they're serious about buying your home. This money is usually held by the title company and goes toward the down payment at closing.

A standard EMD is 1% to 3% of the cost of the home. If a buyer tries to back out of an offer for no good reason, the seller typically keeps the EMD. Therefore, the higher the earnest money, the stronger the offer.

The down payment. 

In most cases, a mortgage requires some down payment. The size of a down payment can determine the strength of an offer. As a seller, your main concern is for the transaction to close. And for that to happen, the buyer’s mortgage has be approved.

In most cases, a larger down payment indicates that a buyer has the cash to make sure the sale goes through. This means that if the appraisal comes in higher than your contract’s sale price, the buyer with a higher down payment would more likely be able to cover the difference with the large amount of cash they have available.

The closing date. 

Closing is when the final paperwork is signed and the sale is final. The entire process, from accepting an offer to closing, takes between 30 and 60 days.

Three days before closing, the buyer receives a closing disclosure from the lender, which he compares with the loan estimate he received when he applied for the loan. If there are material differences between the buyer’s loan estimate and closing disclosure, the closing can’t happen until those amounts are reviewed and approved. But this is rare.

Some transactions can take more time, depending on the buyer’s financing. For example, the average closing time for a Federal Housing Administration (FHA) loan is 43 days, according to Ellie Mae.

Whether you want a slow or quick settlement will depend on your circumstances. If you’ve already purchased your next home, for instance, you probably want to close as soon as possible. On the other hand, you may want a longer closing period if you need the proceeds from the sale to purchase your new home.

Check back on our blog every week for more real estate advice and local articles about living in Albuquerque. And make sure to follow us on Facebook for up to date real estate news for Albuquerque and surrounding areas.

HOT HOME LISTING OF THE WEEK!

1133 Santa Ana Avenue SE, Albuquerque, NM 87123  $499,000

4 Bedrooms / 3 Bathrooms (2 full, 1 partial) / 3550 Square Feet

 Oversized .46 Acre Corner Lot! Incredible backyard for entertaining family & friends with the great room & game room opening on to the covered patio, pool area and beautiful landscaping! Conveniently located close to the golf course, shopping, easy access to KAFB, Sandia Labs, downtown ABQ!!

Contact the Sandi Pressley team for additional details! 

Get your Morning Inspiration with the Sandi Pressley Team

First Time Buyer Tips

by Sandi Pressley

Are you looking to buy your first home? A large number of homes selling today are going to first time buyers. The low mortgage rates and great prices are making it a great market for home buyers, especially first time buyers It’s a good idea to start early, at least 4-6 months before you plan to purchase and before you call a lender. To best position yourself for a purchase, follow these tips.

Get your Credit Report and Score

The 3 credit bureaus offer an annual free check of your credit. Under the Fair Credit Reporting Act they are required to provide you with a copy of your full credit report at no cost. You can also pay a small fee and see your credit score. Your credit score is what a lender will use to determine your creditworthiness. The higher your score, the better your interest rate will be. Lenders look at your average score and while they use a complex algorithm, having good credit can make a huge difference in your monthly payment. All three credit bureaus can take up to 90 days to correct errors on your report. Check it carefully for mistaken identities, signs of identity theft and payments that were incorrectly reported. Make sure to allow plenty of advance time for those corrections. This will make the pre-approval process smoother.

Keep Your Scores Up

You might think that opening a new credit account and then leaving it uncharged will help your credit score. This includes large purchases like furniture and cars. It also includes personal loans, major credit cards and even store credit cards like those offered at department and home improvement stores. Lenders look at your credit score but they also consider your debt to income ratio. The higher this number is, the more risk you pose. Rates rise or loans are denied. It is best to wait to open new accounts until after your home loan has closed.

Get Pre-approved

Know what you can afford AND what you can qualify for before you go shopping for a home. Your lender will want to see your credit reports, job history, income, loans, credit card balances and any alimony or child support you pay or receive. Once you apply for a loan and get a pre-approval letter, finding a home in your price range is easier and you don’t risk falling in love with a house that’s out of reach. Based on all the financial information you provided, your lender will provide a tentative commitment to your loan. You won’t lock your interest rate yet but your lender can give you an idea of what your monthly payment might be like and how much of a down payment you might need.

Make a List

Make a list of all the things you want and need in a home. Do you need a single story home? Do you want to include a pool or horse stables in your purchase? Before you call a real estate professional it’s a good idea to have your choices narrowed down. Looking at 20 houses in one day might sound like fun but you won’t enjoy it if none of those homes meet your needs. Communication is key when it comes to your agent helping you find a home. Tell them what you’re looking for and talk to them if your needs or wants change during the home search process.

Find a Broker

When you’re ready to go look at homes it’s important to hire the right broker to help you. It’s important to find someone who is experienced in negotiations and who knows the areas you’re shopping in. You should interview no less than 3 agents in this stage of the process. Look for a broker who has a positive track record and whose personality is a good fit for yours. You’re likely to be spending a lot of time together in the process of finding and purchasing your first home.

Check Your Expectations

Unless you’re having a home custom built, you’re unlikely to find a home that has everything you’re looking for. Make a list of the top 3-5 things that are deal breakers and be flexible on everything else. Cosmetic changes like paint and carpet are an easy fix compared to structural changes and major renovations. Some home improvements can be covered by your mortgage loan. Talk to your lender about programs that may be able to help.

Real Estate is NOT a Short Term Investment

Unless you buy cheap, do all the work yourself and then flip the home for an immediate profit, you should always think of real estate as a long term investment. The National Association of Realtors says that home equity in general beats out inflation by one or two percent annually. Add that to the tax benefits of home ownership and this is an investment that can really pay off if done right. It’s not just an investment though. If you focus completely on the financial aspects of your home purchase you might miss out on the joys of home ownership. Living in a great neighborhood, not worrying about rising rents and making your house a home, all easily outweigh the financial benefits of owning. When you’re ready to purchase your first home, contact The Sandi Pressley Team and let our buyer specialists help you find the home of your dreams.

Have An Awesome Week!

Sandi's Hot Home Listing

1412 Stagecoach Ln, Albuquerque

Price: $575,000 Beds:5 Baths: 4 Square Feet: 4,250

Check out this Private Dream Home! Nestled in desired Four Hills, this rare find 2.21 acre single level dream home offers Elegance and Tranquil living! With over 4200SF, PLUS attached Sunroom 267+SF (not incl in sqftg) the open floor plan offers 5 BDRMS/4 Baths/Huge 3 Car garage ,2 breathtaking living areas +formal dining. Lovely raised and T&G/Beamed ceilings with picturesque window which flood the home with natural light and views

View This Listing


AND HERE'S YOUR MONDAY MORNING COFFEE!!

How to stay in love with your house.

by Sandi Pressley

How to fall in love with your home When you’re shopping for a new home, you’re likely to be emotional about the process. You may fall in love with a house that isn’t right for you. Here are some tips to help you make a smart decision.

  • Shop for the home you can afford
  • Being house poor is never fun. Even the most beautiful home, with all the special features, can seem like a burden if it’s not affordable. In a worst case scenario, you may end up losing that home to foreclosure! Make sure you know the difference between what you can afford and what you can qualify for and shop for affordability.
  • Work with a Realtor
  • Looking at homes online can be a dangerous game. Some websites might be posting outdated information and the home you fall in love with could be under contract or no longer for sale at all. Your real estate professional will ensure you’re getting the most up to date information and also help you negotiate the best deal possible when you do find the home of your dreams.
  • Shop for the home you need
  • You might be tempted to buy the biggest home you can get in your price range. However, just like the unaffordable home, having a home that is much bigger than you need can be just as frustrating in the long run. Heating and cooling a larger home can be costly. Maintenance, upkeep and cleaning a large home can also be daunting.
  • Buy a home that suits your lifestyle
  • Are you a frequent traveler? You’re probably not going to be interested in a home with a lot of landscape maintenance or a fixer-upper. Have kids? You’re less likely to be shopping for a condo. Make sure the home you choose fits the life you live.
  • Distance matters
  • If you’re currently driving less than half an hour to work or school, buying a house that significantly adds to your commute can be a very bad idea. Not only will the longer time away from home become a frustration, but the extra fuel and vehicle maintenance can be costly.

Falling in love with your new home is about more than getting the biggest and fanciest. It’s about finding the perfect fit, from lifestyle and commute to size and affordability. If you’re ready to start your new home search, call the Sandi Pressley team today!

Have An Awesome Week!

Sandi's Hot Home Listing

10805 Towne Park Dr, Albuquerque

Price: $145,000 Beds:3 Baths: 2 Square Feet: 1,308

This lovely single story Home in gated community offers a spacious & functional floor plan complete w/cathedral ceilings, laminate wood flooring & tile.This open concept floorplan showcases a spacious & sunny kitchen w/plenty of counters & cabinets w/ lovely dining area. Large Master bedroom is complete w/full Master Bath and access onto patio.Additional amenities include oversized 2 Car Garage,from backyard private gate access to tranquil walking path.Back yard is tastefully landscaped for low maintenance-This home is a must see!!Close to shopping,KAFB and Sandia Labs. This gated community has 2 pools,2 parks,club house,work out room & tennis courts..

View This Listing


AND HERE'S YOUR MONDAY MORNING COFFEE!!

 

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Photo of The Sandi Pressley Team Real Estate
The Sandi Pressley Team
Coldwell Banker Legacy
10400 Academy Rd. NE Suite 100
Albuquerque NM 87111
505-980-2999
505-263-2173
Fax: 505-212-0729

Quick links to this site are also SandiSells.net or SandiSellsHomes.com