Preapproved Vs. Prequalified: Which Is Better?

When you prepare to apply for a mortgage, you will come across financing terms like “prequalification” and “preapproval.” It’s important to understand the meaning of these terms, as this will guide your home search by allowing you to understand your buying power and show the seller that you’re a serious and qualified buyer.

At the fundamental level, preapproval and prequalification are types of mortgage approvals, and they refer to the steps a lender has taken to verify that a borrower can afford a mortgage. Here are a couple of points to keep in mind:

1. Many lenders use prequalification and preapproval interchangeably. Every lender handles mortgage approvals differently and the steps involved change from lender to lender.

2. No matter matter the type of mortgage you apply for, it’s not a guarantee that you’ll close the loan.

We’ll also explain how our preferred lender handles approvals, so you can know what to expect when you apply for a mortgage.

WHAT IS MORTGAGE PREQUALIFICATION?

A prequalification generally means that the lender collects some basic financial information from you to estimate how much house you can afford.

A prequalification is a ballpark estimate and is less reliable than a preapproval, which usually involves your lender checking your credit score and reviewing bank statements along with other financial documents.

As you begin searching for a home, realtors and sellers want to see you’ve been working with a mortgage lender so they know you can afford to buy a home. You’ll need a qualified real estate agent that can negotiate the best price and terms for you along with a solid preapproval letter.

VERIFIED APPROVAL

After you’ve been approved, you can level up to a verified approval by providing some documentation so your lender can verify your income and assets.

Verifying your income and assets along with your credit history is a more accurate estimate of what you can afford. It also carries more weight with a real estate agent and the seller, because they’ll know we verified that you can afford the home you wish to buy. You can provide your approval letter to your real estate agent and the sellers as proof that you can obtain a large enough mortgage to purchase the home.

SUMMARY

Getting approved early in your home search is a great way to know what you can afford, so you can narrow in on your dream house. To get started, apply for a mortgage and get premium pricing on your interest rate.

From Offer To Close

Inspections

Home Inspections and potential repairs are the number one reason sales do not close. Typically, buyers have a certain number of days in which to inspect the property and accept or reject the property based upon these mechanical and structural inspections. Save yourself time, money and disappointment and do the deferred maintenance now.

Home Warranty Plans

Home warranty plans go a long way to alleviate some of the risks and concerns buyers have when purchasing a home. For a modest price, the seller can provide a one-year warranty covering specified heating, plumbing, electrical, water heater or appliance breakdowns. Coverage under most plans commences as soon as the property goes under contract.

in Your Best Interest

Fixed Rate Real Estate knows how to market and sell real estate. A property that is properly marketed is not only much more likely to sell, but it’s much more likely to sell for a higher price. Our team will work to be a powerful negotiator on your behalf to ensure the highest possible return for you and pave the way to a smooth closing.

Throughout The Listing Process

• We help you prepare your home to make it look its best

• We stay in touch with you on a regular basis to discuss the market, in addition to following up on showings and just checking in

• We email feedback

• We keep you informed of all marketing and advertising efforts

• We monitor market activity

• We will always be available to you by phone and e-mail

A Smooth Closing

• We will closely monitor all lender and escrow activities throughout the process

• We concentrate on solutions, not problems

• We are sure that buyers remove contingencies according to the time frame specified in the contract

• We advise and assist in negotiation of all inspection items

• We represent your best interest at all times and in all negotiations

• We accompany you at closing

7 Ways To Save Money When Buying A Home In Colorado

When you’re looking for  homes for sale, in Colorado you probably have a budget in mind. You know what you can reasonably afford and how much of a mortgage you qualify for. But what if you could save money on your next home purchase and help your budget go a little bit further? You can with Fixed Rate Real Estate along with getting 50% Cash Back at closing, here are a few easy ways to save money and get the best house possible without breaking the bank.

Tips to Save Up for a New Home

Buying a home is the American dream. Follow these tips to save up and make your dream a reality. 

1. Save Up Ahead of Time

It should come as no surprise that you’ll need to make a down payment before you can get into the house of your dreams. But the more cash you have up-front, the less money you’ll end up borrowing from your mortgage lender. Remember, every mortgage has an interest rate that’s based on your credit score, your debt-to-income ratio, and your overall credit history. The higher that interest rate is, the more money you’ll pay to the lender. If you borrow less because your down payment is larger, you’ll save thousands on interest over the life of your loan.

1. Hire a Professional Realtor

Unfortunately, some home buyers believe they can save a lot of money by trying to buy a house on their own. While it seems true in theory, it often adds thousands to the overall cost in reality. The best way to save money when choosing  homes for sale in Colorado is to hire an experienced Realtor. They understand the buying process and can help you avoid costly mistakes that could blow your budget after you close on the property.

1. Get the Property Inspected

Inspections are part and parcel of the home buying process. Without them, you have no way of knowing what’s going on inside a house. If that property has a bunch of hidden damage, you’ll have to pay to fix the issues yourself. The easiest way to save money on a home is to find out what’s wrong with the property before you close on it. If you find any issues, you can negotiate with the seller before you finalize the deal.

1. Negotiate with the Seller

Speaking of negotiating, you need to plan on doing it throughout the buying process. Negotiate the asking price, repairs, closing costs, and anything else that pops up. Remember, the asking price is rarely ever a firm amount. The seller wants to get out of their house and will often take a lower price, but you have to ask for it.

 When you’re negotiating with the seller, the main focus is making reasonable offers and requests while under contract.. The more reasonable you are about it, the more likely they are to accept your counteroffers.

1. Shop Around for Homeowners Insurance

You probably already have an insurance provider that you’ve worked with for years. That makes it tempting to buy your homeowners insurance policy from them right off the bat, especially if you’ve had a policy on your previous house. But this can cost you every month.

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What Happens If The Appraisal Comes In Low?

Lets say that you’re buying a home for $500,000 and the appraised value comes in at $480,000. That means that your lender will finance the home for up to $480,000 and not a penny more. What do you do in this situation?

There are some options available to you as the buyer:

1. Come up with an extra $20,000 and bring it to the closing table.

2. Ask the seller to reduce the price down to the appraised value ($480,000).

3. Meet in the middle.

4. Terminate the contract.

5. Renegotiate the deal.

Looking to purchase your next home? Call 303-910-2552 for a free, no obligation consultation.

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What to Expect From A Buyer’s Agent

A real estate agent can be invaluable when you are trying to buy a home. Each agent is different, which means each may take a slightly different approach to the home buying process. However, there are certain things that every real estate agent should do for you as a buyer.

Use the following list to weed out the agents that you don’t want to work with. 

These are critical things a real estate agent should be doing for home buyers. If you find a potential agent that says he or she won’t do the things on this list, keep looking.

When you find a quality agent, he or she will be more than happy to take care of these things. These are the benefits of having a Buyers Agent who will be in your corner fighting hard for you.

The best buyer’s agents will do these nine things for you when purchasing a home no questions asked.

Get You Pre - Approved For A Loan

An excellent Realtor has a valuable network of trusted vendors, lenders and other professionals involved in the home buying and selling process that they can connect you with. Your Realtor will connect you with an experienced lender who will walk  you through the pre-approval process so you can get to shopping for your home.

You want to be pre-approved so you know how much you can afford.

One thing to keep in mind is the difference between getting Pre - Approved and Pre - Qualified. These two mortgage terms are night and day in their meaning. You want to be pre-approved which means the lender has verified your income, employment and ran your credit score. Did you know that a pre-qualification letter in most circumstances does none of these things? Frankly, it is not worth the paper it is written on.

An exceptional seller’s agent will insist upon having a solid Pre-Approval letter so make sure you get one!

Helping You Find A Home

House hunting can be a tiring process at the best of times,  One of your Realtor’s key jobs is to help you clarify what you want most, and find you different options that meets your criteria the best they can. The best real estate agents are going to counsel you on location, neighborhood, schools and other factors.

Your agent should help you determine the best locations for you to search for homes based on what you need to achieve, including the type of neighborhood you want to live in, school districts you want to belong to, etc.

Negotiating Offers

One of the biggest perks of working with Fixed Rate Real Estate’s great buyer’s agent is their ability to negotiate the best price for your home purchase. Our buyer’s agents are trained negotiators who know the value of what they are attempting to buy or sell, which is what makes a respected Realtor so useful.

Our buyer’s agents will analyze the value of the home you are looking to purchase. We will then advise you on what your initial offer should be and how to proceed accordingly when the seller responds to your offer. 

Fixed Rate Real Estate’s buyer agents know how to effectively negotiate to get you the best possible price on the home of your dreams. 

Choosing A Great Home Inspector

Some Home Inspectors are better than others. We have excellent recommendations for you when you are ready for a home inspection. We have worked with these professionals and you will receive the most thorough examination & report of the home you’re looking to purchase. 

Our team at Fixed Rate Real Estate can also advise you on  additional inspections that may apply to the home you are looking at, including lead-based paint, radon, mold, sewer scopes etc. These are all potential stumbling blocks that could cause issues in your sale. 

Contact us whenever you are ready to purchase your next home and our professionals will guide you thoroughly through the home buying process and help you get to the finish line!