Most buyers do not realize there is a difference between a pre-qualification and pre-approval. I feel this is due to lack of knowledge and communication from the lender and buyer’s agent.

Make sure you get pre-approved, versus pre-qualified. Yes, there is a difference. A BIG difference. Pre-qualified simply means the lender goes over the information you have provided (usually over the phone) such as work history, yearly income, debt, and tells you whether or not they think you can get a loan. It does not guarantee you can get a loan, however.

You must be pre-approved before you start looking for a home. Pre-approval is a more in-depth look at your past, which includes pulling a credit report, filling out an application, and affirming whether or not a lender will give you a loan. Once you are pre-approved, you can go look for a home. After you find your perfect home and have reached agreement with the seller on price, terms, etc., this information will be forwarded on to your lender (usually by your agent). After a successful appraisal for the property, the lender will give you a loan commitment letter that assures you will get the loan.

If you have anything in your past that may hinder you securing a loan, make sure you ask the loan officer to send your file to underwriting before they give you a lender approval letter. I cannot stress this enough. This will help all parties, including you, know that you can close on the loan. There is nothing worse then finding a property you love, go through the process and only then are told you cannot get the funding. Sometimes even buyers who get pre-approved may have blemishes in the credit history that can arise to keep them from ultimately closing on a loan.

Buying a home should be an enjoyable and memorable experience. By working with an experienced real estate agent and lender, the process should be smooth. A lot of  hard work goes on behind the scenes with the buyer’s agent, selling agent, and lender that most buyers and sellers never see. Just remember to always ask questions if you are confused or unsure about the process. Keep excellent records of your incoming and outgoing funds. Be honest and truthful to your agent and lender, and you should have a positive experience when you buy your new home.

Next week: Credit tips while waiting to purchase a home.

I cannot stress enough to buyers in this market to make sure they have a good lender and to fully educate themselves with what is required of them during the process. In the past year I have seen and heard many (too many) deals fall through due to the buyer’s financing not meeting the strict requirements of lenders. Also, even after the process has begun, many buyers make poor financial decisions after they make an offer on a home and while they are waiting for the financial part to be finished. In turn they get denied the loan by the lender just prior the the sale being closed.

Although a buyer’s agent has virtually no control over lenders’ decisions, an agent works with lenders on a continual basis and generally has established a good rapport and trust with several different lenders. Choosing a lender can be the difference between having a successful purchase of a home or not getting one at all. If your real estate agent is suggesting you use a specific agent it is not because your agent gets “perks” for using that specific lender, it is because the agent has had first hand experience with that lender and has more then likely had numerous successful transactions. I usually refer my clients to three lenders—lenders whom I feel are the best in the valley due to their competency, reputation, ethics, integrity, and knowledge in the lending industry.

If you are planning on purchasing a home, find a reputable and knowledgeable agent who can assist you with not only finding your home but helping you find a lender you are comfortable with. Be sure to ask questions of both your agent and lender about how to make the purchase of your new home a pleasant experience.

Confused about pre-qualification versus pre-approval?

The market for “nice” homes priced under $200,000 are hard to find, especially if you are looking for a non-distressed sale. Many buyers are faced with having to deal with multiple offer situations, where the home ends up selling for thousands more then the asking price. I’ve seen a lot of buyers coming in with cash. Because of the difficulty in obtaining a secure mortgage right now, buyers with cash have a lot of pull in real estate transactions.

When I acquire new potential buyers, I explain to them current market conditions and I’m given the “are you serious?” look. Many customers do not believe me until we have placed several offers on homes, end up in multiple offer situations, get out bid, and only then do they realize this is really the case. It can be exhausting searching for a home in this market. I check the MLS multiple times a day for new listings which might meet my buyer’s criteria. During this past week, I showed some clients a home that was listed the day I showed it to them. When I called the agent to let them know my buyers were interested in making an offer on the home, I was told they had already accepted an offer and were not willing to look at other offers. Remember, this home was listed for only four hours before my clients viewed it.

Lately, I have noticed banks are purposely marketing REO’s (bank owned properties, ie; foreclosures) at significantly lower prices. This is a strategy for the bank. They will list the home on a Thursday with the “First Look Program,” which means the home must be marketed for three business days before they will even look at offers. This gives them the entire weekend to collect offers. Recently, some clients of mine submitted an offer on an REO on a Thursday, the first day it was listed. We were already the second offer submitted. By Monday morning the bank had seven offers on the home and it ended up going “highest and best.” This home in question was priced significantly lower then what it should have been. I’m guessing it will sell for quite a bit more than the asking price as my clients offered more then asking price and still another bid was accepted. It will be interesting to see the final sales price of the home.

My best advice to potential buyers looking for a home in this market is to be patient! Do not settle for something other then what you’re really looking for when purchasing a new home. It is easy to become frustrated and end up just buying a home to get a home, but please take your time, find a real estate agent who is diligent and committed to you. With the right real estate agent and patience you will find the home that is perfect for you and your family. Although it may take longer then expected, you will be glad you didn’t rush into it and make the wrong decision.

Property Details

Property Photos

Many people like the carefree maintenance of renting and the ease of moving without worrying about having to sell a home first. Interest rates are at an all time low and it is unknown how long they will stay that way. Buyers in the position of not having to sell a property before purchasing a new one have some great buying power in the current housing market.

Renting can be a good option for those unsure of wanting to stay in the area, considering a career change or just don’t want to deal with the hassles and upkeep of owning a home. I will be the first to admit, owning a home is very time consuming, requires a lot of upkeep and has more expenses involved then renting a home. However, I enjoy the fact that I come to a place I call home every day! I also like knowing that at any time I can change a paint color, add a deck or landscaping and customize the home to my liking. Most often renting does not allow you to do that. Tax breaks are also a great part of home ownership!

Although housing prices have had a steady decline, purchasing a home is still an investment! There are many other benefits in owning a home which should not be overlooked, but often are.

Meridian ranks 62 in CNN Money.com as one of the best small cities to live in for 2010.

One of the great things I like about Meridian is its centralized location between Boise and Nampa. Meridian has a large inventory of homes for sale. I’ve seen some great deals out there on some beautiful homes. Unfortunately like most of the surrounding areas, Meridian has also been hit pretty hard by foreclosures and short sales. I’ve seen some homes selling for as low as $65 a sq. ft. Home prices in the area are at around 2001 prices, so it is definitely a buyers market!

If you would like more information about the Meridian area or if you or someone you know is interested in purchasing a home, feel free to contact me any time!