Pinehurst, North Carolina

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Pinehurst - Southern Pines North Carolina

Mortgage Information

Pre-Qualified, Pre-Approval or Loan Commitment... Sometimes the terminology is confusing even to some real estate agents, so it's little wonder that home buyers and sellers are, too. Although related, the three terms each signify a different level of approval from a lender.

The differences between the terms pre-qualified, pre-approval and loan commitment can affect all aspects of your home buying transaction and it could be in your best interest to obtain pre-approval before you begin the home hunting process.

• Pre-Qualified Loan pre-qualification does not typically include an analysis of your credit report or an in-depth look at your true ability to buy a home. You can be pre-qualified by a lender, by a real estate agent or you can do it yourself. The term means that someone has taken a general look at your income and expenses and plugged them in to a debt-to-income ratio formula. Self pre-qualifying will give you a general idea of the price range you can afford but it will not secure an interest rate.

• Pre-Approval When you are pre-approved for a mortgage, it means a lender has looked closely at both your credit report and your income and determined that you qualify for a loan. The lender will tell you the maximum amount of loan it will make, which loan programs you qualify for, and will discuss the interest rates it will offer for different types of loans. When you're pre-approved you can go shopping for a home with confidence about your buying power, but it still isn't a guarantee that the lender will approve the loan.

• Loan Commitment A lender issues a loan commitment after it has approved both the house and you. A home appraisal must meet the lender's guidelines, which usually includes a stipulation that the home must appraise at or higher than the sales price.

Choosing a loan program

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Factors to consider ...

• Your current financial picture

• How you expect your finances to change

• How long you intend to keep your house

• How comfortable you are with your mortgage payment changing

The best way to find the "right" answer is to discuss your finances, your plans and financial prospects, and your preferences "frankly" with a mortgage professional. Please contact us for the names and contact information of Pinehurst - Southern Pines North Carolina mortgage professionals that we know, trust and and respect.

IMPORTANT TIP: Each credit inquiry may ding your credit file... So it is best to determine who you will use before releasing your social security number. When comparing loan products, be sure to get a good faith estimate from your prospective lender and compare loan costs.

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Mortgage 101 | FAQs

For specific questions regarding mortgage lending please contact us... In the interim, we've compiled a list of questions most frequently asked that will should provide you with some immediate clarification.

Q: How do I improve my credit score?

Making timely payments will certainly help. You should check your credit once a year to make sure the report is accurate and dispute anything that is inaccurately reported on your credit report. To improve a score, we should first discuss what NOT to do. Never pay your mortgage late; this does the most severe damage to your credit score. If you have to pick between paying a credit card, car payment or mortgage on time, always choose the pay the mortgage first. Don’t max our your credit cards. Unpaid bills can result in collections or judgments, which can also hurt a credit score. Try to avoid getting in over your head to the point of having to file bankruptcy or foreclosure. With everything, time can certainly heal a challenging credit situation if you start making on time payments and continue to do so.

Q: How and when should I get pre-approved?

Getting pre-approved is easy! We ask that you provide us with 2 years' W-2s, one month of pay stubs, 2 months' bank statements, photo ID, and most recent 401K or IRA statement. We then pull credit and complete your loan application to determine what programs and loan amount you can qualify for. We recommend you get pre-approved if you are thinking about buying a new home whether you have one to sell or if you’ve never bought a home before. Most agents won’t want to spend time showing you homes if you can’t qualify to buy them!

Q: When and why do rates change?

Interest rates can change on a daily, even hourly basis. Interest rates fluctuate in response to the ever-changing financial market. Keep an eye on the bond rate as that is a good indicator of what the interest rates will do.

Q: What kind of tax benefits will I have if I purchase a home?

We have to first recommend that you consult your tax advisor; however, there are definitely some tax benefits to owning a home. You can write off the interest paid on your mortgage, your property taxes and possibly the origination fee or points paid when you acquire your loan.

Q: Should I use a Realtor?

Absolutely! As a buyer, it costs you nothing to benefit from the access agents have to all properties listed on the multiple listing service, as well as their expert negotiating skills. You need a professional representing you who is knowledgeable of the market and is committed to negotiating the right price and terms on your home purchase. As a seller, the commission you pay is well worth the time that is freed up by allowing an agent to market and sell your home. By hiring a real estate professional who knows the market, you can be sure to receive top dollar for the sale of your home.

Q: How can I help get my loan done faster?

The loan process is a team effort and you are a key player. Being organized by having immediate access to all of your housing, employment, tax and financial information and documentation can definitely save time. If the underwriter is requesting documentation or letters of explanation, it is to meet specific guidelines set by the lender. Please provide them to us as quickly as possible. We all have the same goal and that is to get you into your new home as soon as possible, but we can’t do it without you!

Q: Should I get a Fixed rate or an ARM?

We usually answer that question by asking a question; how long do you plan to stay in the home? Most people on average move about every 5-6 years, so if you are one of those people, you can benefit with the lower rate of an ARM. That way you aren’t paying a higher rate from which you will never fully maximize the benefit. It also can provide you will some flexibility to free up cash each month with a lower payment, while also allowing you to make extra payments to principal if you have the extra cash. On the flip side, if you like the security of a fixed rate whether you will move or not, then that’s the type of loan program you should choose. Ideally, the loan should always help you meet your payment and equity objectives and that’s why we are here to offer you expert advise to accomplish your goals and give you a loan you can always feel good about.

Q: When should I refinance?

That all depends on what you are trying to accomplish. Typical reasons to refinance are: lower interest rate, going from an ARM to Fixed, changing fixed term to either shorter or longer fixed period, pulling cash out, going from fixed to interest only, paying down principal to remove PMI, etc. It is best to sit down with us in a mortgage planning session to best determine how we might meet your financial objectives through a refinance.

Q: What SHOULDN’T I do when in the process of obtaining a mortgage loan?

This is the most critical topic of discussion. Please heed this advice and tell everyone you know. The following actions can take your loan from approval to denial: 1- large purchases. Wait to buy that new car or furniture until after your loan is closed. The new debt can affect your debt to income ratios to where to the point of no longer qualifying. 2- change in employment. Try not to quit your job, get fired, start a new job in a new field, change from W-2 to self-employed or go from a salary position to a straight commission until after your loan closes. The change in employment status can affect your income and stability as viewed by an underwriter. Lenders require a 2-year job history, so if you are approved based on your current situation, don’t do anything to jeopardize that approval. 3- switch banks. This is a paper trail nightmare! Underwriters will want a paper trail of where the money came from that was deposited in the new account and may require letters of explanation, cancelled checks, etc. Wait until your loan closes to change banks to avoid the headache of the paper trail. View the NC Home Finance Glossary for more information

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