Hard Inquiry vs. Soft Inquiry — What’s the Difference?

July 17, 2024 by Coleen TeBockhorst

Knowing the difference between a hard inquiry vs soft inquiry can help you maintain a good credit score. Here’s what you need to know.

Most people know that your credit score can drop if you miss a payment or have a new collection filed against you. But how about when you apply for new credit? Yes, a credit application will trigger a “hard inquiry” on your report, which can have an impact on your credit score. Here’s what to know about hard inquiries, and how they compare with “soft inquiries.”

What is a Hard Inquiry?

Hard inquiries occur when you apply for credit and consent to allow a lender to check your credit report. These inquiries dated within the past 12 months count toward 10% of your credit scores even though 24-months of inquiry history is retained in your credit report.

Hard inquiries are listed by date and include the lender’s name and the name of the third-party credit provider that provided the report to the lender.

Examples of hard inquiries include:

Applying for a car loan and the dealer checks your credit report
Applying for a new credit card
Requesting to have the credit limit increased on an existing credit card
Applying for a mortgage
Applying to lease an apartment

Only authorized parties are allowed to access your credit report, and to do so, they must have a permissible purpose. Lenders only have permissible purpose if you have applied for credit and given the potential lender consent to check your credit report. Hard inquiries made for any other reason without your consent are not permissible and you have the right to dispute any unauthorized inquiries.

How Many Points Does a Hard Inquiry Affect Your Credit Score?

According to credit experts, “In most cases, a hard inquiry from a lender will decrease your scores by 7 points or less. The highest drop in scores that I’ve seen was 23 points, but that is very rare.”

The impact of applying for credit will differ from person to person based on their unique credit history. Individuals with very little or no credit history may see a bigger drop in scores compared to someone who has established credit and who has proven to manage more accounts over time.

It is true that in most cases, an occasional hard inquiry will have little to no impact on your credit scores. However, a new hard inquiry can lower your score by a few points when certain factors come together in your credit report:

Opening a new credit card or line of credit will affect your length of credit history because it lowers the average age of your total accounts. This, in turn, will lower your length of credit history and subsequently, will lower your credit scores.
New credit, once used, will increase the “amounts owed/credit utilization” factor of your credit scores and may also contribute to lowering your scores.

Minimize the Impact of a Hard Inquiry on Your Credit Score

To minimize the impact on your score, do your rate shopping within a focused amount of time. Most credit scores are not affected by multiple inquiries from the same type of creditor within a short period of time.

Credit score models have been programmed to accommodate typical “rate shopping periods” for auto, mortgage, or student loans. This means that if you are looking to buy a new automobile, conduct your comparison shopping among multiple dealers and creditors within a 30-day average period. Then, multiple hard credit inquiries from auto lenders will only count as a single hard inquiry for credit scoring purposes.

Hard inquiries count toward the calculation of your credit scores, so it’s important to monitor your inquiries. Make sure that you know who, when, and why a creditor has reviewed a copy of your credit report. If you notice hard inquiries in your credit report that you do not recognize, it’s important to find out more about them by using the information in your report and disputing the inquiries. You can learn more about how to dispute inaccuracies in your credit report by visiting the FTC’s website.

How to Check for Hard Inquiries

The next time you apply for new credit, you’d be wise to obtain and review your credit report. Or, get a free report at annualcreditreport.com, a federally-mandated website that gives you a free report from each of the three major credit bureaus. In your report, you’ll see a list of the creditors and lenders who have checked your credit file over the past 24 months. These credit checks by creditors and lenders are called “inquiries.”

But not all inquiries are created equal — hard inquiries and soft inquiries have different effects on your credit score.

What is a Soft Inquiry?

Soft inquiries are checks of your credit report that are not associated with your credit application. They do not impact your credit scores in any way.

Examples of soft inquiries might include any of the following:

Checking your credit report and credit scores through an organization authorized to provide credit reports to consumers
Applying for a job
Receiving prescreened offers of credit from credit card companies, insurers, and other creditors

Hard Inquiry vs. Soft Inquiry: Rule of Thumb

If you’re not applying for credit, you won’t incur a hard inquiry. So you don’t need to worry about dragging down your credit score by signing up for an app or service that helps you monitor your credit.

That being said, don’t be afraid to apply for credit if you need it. The impact on your score is typically small if you are not applying for many kinds of credit within a short time.

Understanding Warrantable vs. Non-Warrantable When Purchasing a Condo

July 16, 2024 by Coleen TeBockhorst

When you’re shopping for a condo, there’s a bit more on your plate than just the typical homebuying concerns like credit scores, interest rates, and loan programs. A crucial aspect is understanding the role of the Homeowners’ Association (HOA) and whether the condo is warrantable or non-warrantable. This distinction can significantly impact your mortgage process and future as a condo owner.

Warrantable Condos: What You Need to Know

A condo is considered warrantable if it meets the standards set by Fannie Mae and Freddie Mac, the two main government-sponsored entities in the mortgage industry. These entities buy mortgages on the secondary market, so lenders follow their guidelines to ensure loans are sellable.

For a condo to be warrantable, it must:

Not be part of a timeshare.
Meet owner-occupancy rate requirements.
Contribute at least 10% of its annual budget to its reserve account.
Maintain adequate reserves for repairs and maintenance.
Ensure a low delinquency rate in HOA dues.
Restrict short-term rentals.

Buying a warrantable condo often makes the mortgage process smoother and might even be in your best long-term interest.

Non-Warrantable Condos: Understanding the Risks

A condo may be non-warrantable for several reasons:

Ongoing construction or development projects.
Active litigation involving the HOA.
Low owner-occupancy rates.
High concentration of units owned by a single entity.

For example, in a condo community with 5-20 units, Fannie Mae limits ownership to two units per entity. For larger communities, no single entity can own more than 20% of the units, though Freddie Mac allows up to 25%.

Knowing a condo’s warrantability status helps you make an educated decision. Your mortgage advisor can guide you through this process, ensuring you understand which condos meet the requirements for different loan programs.

Government Loans for Condos: FHA and VA

FHA and VA loans have their own criteria for condo warrantability, similar to those of Fannie Mae and Freddie Mac. These agencies maintain lists of approved condo communities, which might not always align with the GSEs’ lists. However, if a condo is approved by Fannie Mae or Freddie Mac, it often qualifies for FHA or VA loans after their review.

FHA guidelines require:

Borrowers to meet standard FHA mortgage criteria.
At least half of the community’s units to be owner-occupied.
New developments to have at least 30% owner occupancy.

There are no extra charges for financing a condo with an FHA or VA loan compared to a single-family home.

Advantages of Buying a Warrantable Condo

Warrantable condos are easier to finance, with many lenders only offering loans for such properties. Some lenders provide options for both warrantable and non-warrantable condos, but loans for warrantable condos usually come with lower interest rates and down payments, making them more affordable.

Why Warrantability Matters

When buying a detached home, you own the entire structure. But in a condo, the financial and structural health of the entire development affects the risk level for lenders. Therefore, lenders consider not just your credit and down payment but also the condo community’s overall stability.

The HOA owns and maintains common areas and building exteriors, impacting your lender’s collateral. Hence, the lender analyzes both you as a buyer and the condo community’s financial health.

Considering a Non-Warrantable Condo

While some lenders offer loans for non-warrantable condos, it’s crucial to understand potential issues:

Higher down payments and interest rates.
Possible signs of financial instability if HOA dues are delinquent or reserves are insufficient.
Risk of increased HOA dues or special assessments.
Limited buyer pool when reselling.

Externally, warrantable and non-warrantable condos might look the same. However, working with your real estate agent and mortgage advisor will reveal important differences affecting your purchase decision.

What’s Ahead For Mortgage Rates This Week – July 15th, 2024

July 15, 2024 by Coleen TeBockhorst

With lofty expectations, the CPI delivered a lower-than-expected inflation increase, leading to a positive uptake across many lending partners and markets. However, the PPI was on the opposite end of that, with a higher-than-expected inflation rate increase, muting the positive response from the CPI data release.

The outlook for a rate cut this year has changed, making the potential for it highly likely. Even Jerome Powell, who usually has a more hawkish response regarding rate cuts, is now leaving some room for this possibility. With the outlooks in favor of a rate cut, we’re seeing the impact across many markets as the potential change for rates is reduced long term.

Consumer Price Index

The cost of consumer goods and services fell in June for the first time since the pandemic in 2020, affirming a recent slowdown in inflation that could impel the Federal Reserve to cut high U.S. interest rates in the next few months. The Consumer Price Index fell 0.1% last month after no change in May, the government said Thursday. That’s the first drop since May 2020 at the height of the pandemic when the economy was mostly shut down.

Producer Price Index

Wholesale costs rose slightly faster than expected in June, but not enough to counter a recent string of reports showing inflation has slowed again. The Producer Price Index advanced 0.2% last month, the government said Friday. That was a touch faster than Wall Street’s 0.1% forecast.

Consumer Credit

Total consumer credit rose $11.3 billion in May, up from a $6.5 billion gain in the prior month, the Federal Reserve said Monday. Economists had been expecting a $8 billion gain, according to a Wall Street Journal survey. The rise in May translates into a 2.7% annual rate, stronger than the 1.5% rise in the prior month.

Primary Mortgage Market Survey Index

15-Yr FRM rates are seeing a decrease by -0.08% with the current rate at 6.17%
30-Yr FRM rates are seeing a decrease by -0.06% with the current rate at 6.89%

MND Rate Index

30-Yr FHA rates are seeing a decrease by -0.25% for this week. Current rates at 6.25%
30-Yr VA rates are seeing a decrease by -0.26% for this week. Current rates at 6.26%

Jobless Claims

Initial Claims were reported to be 222,000 compared to the expected claims of 236,000. The prior week landed at 239,000.

What’s Ahead

Proceeding reports after the inflation data releases are, as expected, having a very light release schedule. The only notable release are the retail sales reports which indicate how much consumers have leveraged their purchasing power in the last quarter.

What’s Ahead For Mortgage Rates This Week – July 15th, 2024

July 15, 2024 by Coleen TeBockhorst

Consumer Price Index

Producer Price Index

Consumer Credit

Primary Mortgage Market Survey Index

15-Yr FRM rates are seeing a decrease by -0.08% with the current rate at 6.17%
30-Yr FRM rates are seeing a decrease by -0.06% with the current rate at 6.89%

MND Rate Index

30-Yr FHA rates are seeing a decrease by -0.25% for this week. Current rates at 6.25%
30-Yr VA rates are seeing a decrease by -0.26% for this week. Current rates at 6.26%

Jobless Claims

Initial Claims were reported to be 222,000 compared to the expected claims of 236,000. The prior week landed at 239,000.

What’s Ahead

The Difference Between Pending And Contingent Deals

July 12, 2024 by Coleen TeBockhorst

The real estate market can be a bit confusing, especially when you encounter terms like “pending” and “contingent” deals. Understanding these terms is crucial whether you’re a buyer or a seller, as they can significantly impact the progression of a property transaction.

What Is a Contingent Deal?

A contingent deal occurs when a seller has accepted an offer from a buyer, but the sale is dependent on certain conditions being met. These conditions, or contingencies, are clauses included in the contract that must be satisfied for the sale to proceed. Common contingencies include:

Home Inspection Contingency: The buyer can back out or negotiate repairs if significant issues are found during the inspection.
Appraisal Contingency: The deal depends on the property being appraised at a value equal to or greater than the agreed-upon purchase price.
Financing Contingency: The sale hinges on the buyer securing a mortgage loan.
Sale of Buyer’s Property Contingency: The buyer must sell their current home before purchasing the new one.

While the property is marked as “contingent,” it remains on the market, and other buyers can submit backup offers. However, the initial buyer typically has the first right to proceed with the purchase once the contingencies are resolved.

What Is a Pending Deal?

A pending deal indicates that all contingencies have been met, and the transaction is in its final stages before closing. At this point, the property is effectively off the market, and no new offers are being considered. The steps that typically remain in a pending deal include:

Finalizing Financing: The buyer completes the mortgage process.
Title Search and Insurance: Ensuring the property title is clear of any liens or disputes.
Final Walkthrough: The buyer conducts a last check of the property to ensure it’s in the agreed-upon condition.
Closing: The final step where all documents are signed, and ownership is officially transferred.

Key Differences

The main difference between pending and contingent deals lies in the stage of the transaction process. Contingent deals have unresolved conditions that could potentially derail the sale while pending deals have cleared these hurdles and are moving toward closing.

Understanding these terms helps buyers and sellers manage their expectations and strategize accordingly. For buyers, knowing the status can influence the timing and approach to making an offer. For sellers, it’s essential to keep the transaction moving smoothly to transition from contingent to pending status successfully.

Why It Matters

In a competitive real estate market, knowing whether a property is contingent or pending can help buyers decide where to focus their efforts. For sellers, understanding these terms ensures you’re better prepared for each stage of the sale and can address potential issues proactively.

Navigating the real estate landscape involves many such nuances, and being well-informed can make the process smoother and more successful for all parties involved.

House Hacking Pros And Cons Explained

July 11, 2024 by Coleen TeBockhorst

Have you ever heard of house hacking? It’s a real estate strategy that allows you to live in a property while renting out part of it to generate income. This approach helps offset your living expenses and can even pave the way to financial independence. Here’s a breakdown of what house hacking entails, along with its benefits and drawbacks.

What Is House Hacking?

House hacking involves purchasing a property, living in one part of it, and renting out the other parts. The most common setup is buying a multi-family property (like a duplex or triplex) and renting out the other units. However, house hacking can also involve renting out extra bedrooms in a single-family home or even converting parts of your property into rental spaces, such as a basement or garage apartment.

How Does House Hacking Work?

Purchase a Property: First, you need to find and purchase a property that suits house hacking. This could be a multi-family home or a single-family home with additional rentable spaces.
Live in Part of the Property: You occupy one unit or part of the property as your primary residence.
Rent Out the Rest: You lease the other units or spaces to tenants. The rental income helps cover your mortgage, property taxes, and maintenance costs.
Manage the Property: As a house hacker, you’ll also take on the role of a landlord, which includes maintaining the property, dealing with tenant issues, and handling leases.

The Pros of House Hacking

1. Reduced Housing Costs

One of the biggest advantages of house hacking is the potential to significantly reduce or even eliminate your housing costs. The rental income can cover a substantial portion of your mortgage and other property expenses, allowing you to save money or invest it elsewhere.

2. Building Equity

By owning a property, you build equity over time as you pay down the mortgage. This equity can be leveraged in the future for additional investments or major financial needs.

3. Real Estate Experience

House hacking provides firsthand experience in real estate investing and property management. It’s an excellent way to learn the ropes before diving into more significant real estate ventures.

4. Tax Benefits

As a property owner, you may be eligible for various tax deductions, including mortgage interest, property taxes, and maintenance costs. These tax benefits can make house hacking even more financially attractive.

The Cons of House Hacking

1. Landlord Responsibilities

Being a landlord comes with its own set of challenges. You’ll need to handle maintenance issues, screen tenants, and potentially deal with difficult tenant situations. This responsibility can be time-consuming and sometimes stressful.

2. Privacy Concerns

Living in close proximity to your tenants can lead to privacy concerns. You may have to navigate noise issues or conflicts that arise from shared spaces.

3. Upfront Costs

Purchasing a property requires a significant upfront investment, including a down payment, closing costs, and potential renovations. It’s essential to have a solid financial plan in place before embarking on house hacking.

4. Market Risks

Real estate markets can be unpredictable. Property values may fluctuate, and rental demand can vary based on the location and economic conditions. These factors can impact your rental income and overall investment.

Is House Hacking Right for You?

House hacking can be a powerful strategy for those looking to reduce living expenses and gain real estate experience. It is crucial to weigh the pros and cons and assess your circumstances. If you’re willing to take on the responsibilities of property management and are financially prepared for the initial investment, house hacking could be a rewarding path toward financial independence.

House hacking is more than just a trendy term in real estate. It’s a practical approach that can lead to significant financial benefits. By understanding the potential advantages and challenges, you can make an informed decision about whether house hacking is the right strategy for you.

Preparing for a Mortgage? 5 Ways to Build Credit Without Credit a History

July 10, 2024 by Coleen TeBockhorst

Building a credit profile from scratch can be a daunting task, especially for those who have no credit history. These individuals, often referred to as having a “thin credit file,” face challenges in securing loans, credit cards, or even mortgages. Interestingly, having no credit at all can sometimes be more problematic than having a poor credit history when applying for a mortgage. There are effective strategies to help those with thin credit files establish a robust credit profile. Here are five practical ways to get started:

1. Get a Secured Credit Card

Secured credit cards are one of the quickest and most cost-effective ways to build credit. Unlike traditional credit cards, secured cards require a cash deposit as collateral, which typically serves as your credit limit. For example, if you deposit $500, your credit limit will also be $500. By using the card responsibly and making timely payments, you can demonstrate your creditworthiness to the credit bureaus. Over time, this activity will be reported to the major credit bureaus, helping you build a solid credit history. Ensure you choose a secured card that reports to all three major credit bureaus: Experian, TransUnion, and Equifax.

2. Become an Authorized User

Another effective strategy is to become an authorized user on someone else’s credit card account. This could be a family member or a trusted friend with good credit habits. As an authorized user, the primary account holder’s positive payment history will be added to your credit report, boosting your credit profile. However, it’s crucial to ensure the primary account holder maintains good credit behavior, as any negative activity can also impact your credit.

3. Apply for a Credit Builder Loan

Credit builder loans are specifically designed to help individuals build credit. Unlike traditional loans, credit builder loans hold the loan amount in a secured savings account while you make monthly payments. Once the loan is paid off, the money is released to you. This process helps you build a positive payment history, which is essential for improving your credit score. Credit builder loans are typically offered by credit unions and community banks.

4. Use a Co-Signer

If you’re having trouble qualifying for a loan or credit card on your own, consider asking someone with good credit to co-sign for you. A co-signer agrees to take responsibility for the debt if you default, which reduces the lender’s risk. This can make it easier for you to get approved and start building credit. However, it’s important to manage the account responsibly, as any missed payments will affect both your and your co-signer’s credit.

5. Report Alternative Payment Data

Traditionally, credit scores are based on credit card and loan payment history. However, some services allow you to report alternative payment data, such as rent and utility payments, to the credit bureaus. Companies like Experian enable you to add these types of payments to your credit report. This can be a great way to establish a credit history if you don’t have any traditional credit accounts.

Building a credit profile with a thin credit file requires patience and strategic planning. By using secured credit cards, becoming an authorized user, applying for credit builder loans, using a co-signer, and reporting alternative payment data, you can effectively establish a strong credit history. Remember, the key to building and maintaining good credit is consistent, responsible financial behavior. Over time, these efforts will pay off, opening doors to better financial opportunities.

Green Mortgages Financing Energy Efficient Homes

July 9, 2024 by Coleen TeBockhorst

What is a Green Mortgage?

A green mortgage is a type of home loan designed to incentivize energy-efficient building practices. These mortgages are specifically tailored for properties that meet certain environmental standards, encouraging homeowners and buyers to consider energy efficiency as a key factor in their purchasing decisions.

Benefits of Green Mortgages

Lower Energy Bills

One of the most immediate benefits of investing in an energy-efficient home is the reduction in utility costs. Homes that meet green mortgage criteria often feature advanced insulation, high-efficiency HVAC systems, and energy-saving appliances, all of which contribute to significantly lower energy consumption and, consequently, lower energy bills.

Improved Home Value

Homes with green certifications tend to have higher resale values. As awareness of environmental issues grows, more buyers are looking for properties that are not only comfortable but also sustainable. This makes green-certified homes a valuable asset in the real estate market.

Healthier Living Environment

Green homes often use non-toxic materials and provide better air quality, leading to a healthier living environment. Features like improved ventilation systems and moisture control can reduce the presence of allergens and other pollutants, creating a more comfortable and healthy home.

How to Qualify for a Green Mortgage

Energy Assessment

The first step to qualifying for a green mortgage is to have an energy assessment conducted on your home. This assessment will evaluate the property’s energy efficiency and identify areas for improvement. The results will help determine whether your home meets the criteria for a green mortgage.

Meeting Standards

There are several green building standards that homes can meet to qualify for a green mortgage, including LEED (Leadership in Energy and Environmental Design), Energy Star, and the Home Energy Rating System (HERS). These standards cover various aspects of energy efficiency, from insulation and windows to heating and cooling systems.

Financing Options

FHA Energy Efficient Mortgage (EEM)

The Federal Housing Administration (FHA) offers an Energy Efficient Mortgage program that allows borrowers to finance energy-saving improvements as part of their home loan. This program is designed to make it easier for homeowners to afford the upfront costs of energy-efficient upgrades.

Fannie Mae Homestyle Energy Mortgage

Fannie Mae’s Homestyle Energy Mortgage allows homeowners to finance energy-efficient improvements, renewable energy systems, and water efficiency upgrades. This mortgage can be used for new purchases or refinances and provides up to 15% of the property’s as-completed appraised value for these upgrades.

Making the Switch

Transitioning to a green mortgage can seem daunting, but the long-term benefits make it worthwhile. Not only can you enjoy lower energy bills and a healthier living environment, but you’ll also be contributing to a more sustainable future. Whether you’re buying a new home or upgrading your current one, exploring green mortgage options can be a smart financial and environmental decision.

Green mortgages represent a growing trend in the housing market, reflecting the increasing importance of sustainability. By investing in energy-efficient homes, you’re not just saving money; you’re also making a positive impact on the planet. If you’re in the market for a new home or considering refinancing, a green mortgage might be the perfect fit for you.

What’s Ahead For Mortgage Rates This Week – July 8th, 2024

July 8, 2024 by Coleen TeBockhorst

With the FOMC Minutes coming precisely within expectations, there is once again a lot of optimism that the Federal Reserve may cut rates this year. Much of the Q2 data reports show favorable amounts of reduction in inflation as well as a more stable economic outlook for the rest of the year. With the larger reports in PMI Manufacturing numbers and Non-farm Payroll figures, the overall outlook seems to align with the rest of the data points, justifying the more recent optimism about potential rate cuts. This week should give the final results on Q2 inflation results with the new releases of CPI and PPI data reports.

Global US Manufacturing PMI

A key barometer of U.S. factories fell in June for the third month in a row, signaling that an ongoing slump in the industrial side of the economy shows no sign of ending. The Institute for Supply Management’s manufacturing index slipped to 48.5% in June from 48.7% in the prior month. Numbers below 50% signal that the manufacturing sector is shrinking.

U.S. Hourly Wages

Wage growth for the last 12 months ending in June slowed to 3.9% from 4.1%, marking the smallest increase seen since August 2021. At one point, yearly wages were rising as fast as 5.9%. A shortage of labor prompted millions to change jobs in pursuit of better pay, particularly to cope with significant inflation.

Primary Mortgage Market Survey Index

15-Yr FRM rates are seeing an increase by 0.09% with the current rate at 6.25%
30-Yr FRM rates are seeing an increase by 0.09% with the current rate at 6.95%

MND Rate Index

30-Yr FHA rates are seeing a decrease by -0.01% for this week. Current rates at 6.50%
30-Yr VA rates are seeing no change for this week. Current rates at 6.52%

Jobless Claims

Initial Claims were reported to be 238,000 compared to the expected claims of 233,000. The prior week landed at 234,000.

What’s Ahead

CPI and PPI are the most relevant reports coming up, with the rest of the week having an extremely light release schedule.

Prequalification vs. Preapproval: Key Differences Every First-Time Home Buyer Should Know

July 7, 2024 by Coleen TeBockhorst

What’s the Difference Between Prequalification and Preapproval?

Introduction

When buying a home, understanding mortgage terms is crucial. Two key terms you’ll encounter are “prequalification” and “preapproval.” While they sound similar, they serve different purposes. This post explains the differences to help you make informed decisions.

What is Prequalification?

Definition:
Prequalification is an initial step where you provide basic financial information to a lender, including income, assets, debts, and credit score.

Process:

Submit financial details online, by phone, or in person.
Lender reviews information to estimate the mortgage amount you might qualify for.
Quick and informal, usually taking a few minutes.

Benefits:

Provides an early estimate of your borrowing capacity.
No impact on your credit score.
Useful for initial exploration of mortgage options.

Limitations:

Based on unverified information, making it less reliable.
Not a guarantee of loan approval or terms.

What is Preapproval?

Definition:
Preapproval is a detailed process where a lender verifies your financial information to determine your creditworthiness and loan eligibility.

Process:

Provide documentation such as proof of income, bank statements, and tax returns.
Lender conducts a thorough financial evaluation, including a credit check.
If approved, you receive a preapproval letter with loan amount, interest rate, and terms.

Benefits:

More accurate and reliable estimate of your borrowing capacity.
Strengthens your position as a serious buyer.
Some lenders offer rate lock options.

Limitations:

More time-consuming, requiring detailed documentation.
Involves a hard credit check, which can temporarily affect your credit score.

Key Differences Between Prequalification and Preapproval

1. Depth of Information:

Prequalification: Based on self-reported information.
Preapproval: Based on verified financial information and a credit check.

2. Reliability:

Prequalification: Provides an estimate, not a guarantee.
Preapproval: Offers a conditional commitment from the lender.

3. Time and Effort:

Prequalification: Quick and easy.
Preapproval: Detailed and time-consuming.

4. Impact on Buying Process:

Prequalification: Helps set a budget.
Preapproval: Positions you as a serious buyer.

Which One Should You Get?

Prequalification:

Early stages of home buying.
Exploring different lenders and options.

Preapproval:

Ready to start house hunting.
Making strong offers in competitive markets.

Conclusion

Understanding prequalification and preapproval can enhance your home buying experience. Prequalification gives an initial idea of your borrowing capacity, while preapproval provides a reliable assessment, positioning you as a qualified buyer. For personalized advice, contact Coleen TeBockhorst at Bay Equity Home Loans.

Contact Information:

Phone: 612-701-8512
Email: Coleen@ColeenTeBockhorst.com
Website: Bay Equity Home Loans
Facebook: Coleen TeBockhorst

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Stay informed and make the best investment decisions by following our blog and social media channels. Share this post with anyone who might benefit from understanding the differences between prequalification and preapproval!

« Previous Page

Hard Inquiry vs. Soft Inquiry — What’s the Difference?

Understanding Warrantable vs. Non-Warrantable When Purchasing a Condo

What’s Ahead For Mortgage Rates This Week – July 15th, 2024

What’s Ahead For Mortgage Rates This Week – July 15th, 2024

The Difference Between Pending And Contingent Deals

House Hacking Pros And Cons Explained

Preparing for a Mortgage? 5 Ways to Build Credit Without Credit a History

Green Mortgages Financing Energy Efficient Homes

What’s Ahead For Mortgage Rates This Week – July 8th, 2024

Prequalification vs. Preapproval: Key Differences Every First-Time Home Buyer Should Know

What’s the Difference Between Prequalification and Preapproval?

Introduction

What is Prequalification?

What is Preapproval?

Key Differences Between Prequalification and Preapproval

Which One Should You Get?

Conclusion

Contact Information:

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