Christi Nelson's Lake Oroville Real Estate Blog

 Mortgage interest rates dropped as well as home prices. You have decided its time to buy a house. Now what? Over the next few days I will take you through the process of what to expect when buying a home.

If you’ve never bought a home before or if you currently own a home but have never bought and sold at the same time, the process can seem intimidating. You can ease your anxiety by making a game plan and choosing the best team of professionals you can find.

The two key players on your team are the mortgage person and the real estate agent. Once you have these selected, they can help you line up the additional help you need.

The first step is to find out how much you can afford and what type of loan you will be getting. A lender will qualify you for a certain loan amount depending on how much cash you have available for a down payment and closing costs — the various fees associated with buying or selling a home. Depending on your loan, the house may have to qualify as well.

Other relevant factors are your credit score, your verifiable income and what type mortgage you decide to use for your purchase. There are a lot of different mortgage options: 30-year fixed-rate mortgages, 15-year fixed, interest-only, as well as various types of adjustable-rate mortgages.

Once you know how much you can afford, your mortgage broker or lender can provide you with a pre-approval letter. This is key in the Oroville Real Estate market today with foreclosures, short sales and seller’s alike. This requires that you complete a loan application and have your credit checked. This will put you in a good bargaining position with the seller.

While you’re checking on financing, you should also find a real estate agent, if you don’t already have one. If you’ve never bought a home before, you should use an agent who is a good communicator and who will take the time to explain the process. Also, keep in mind that your agent will be working with the other parties in the transaction. You want someone you trust and who you are sure will represent you professionally and work diligent on your behalf.

With this ground work completed, you are ready to seriously hunt for a home!

The 30-year fixed-rate mortgage averaged 4.91 percent with an average 0.7 point for the week ending November 12, 2009, down from last week when it averaged 4.98 percent. Last year at this time, the 30-year FRM averaged 6.14 percent.

 Mortgage Rates
30 Year Fixed: 4.98%
15 Year Fixed: 4.40%
1 Year Adj: 4.47%
(U.S. Weekly Averages)

Thought we could use some positive news! 

The National Association of Realtors®   reported for the first time in five years, existing-home sales have increased for four months in a row. The monthly sales gain was the largest on record for the total existing-home sales series dating back to 1999. read more..

On that note, the tax credit is due to run out soon (Nov 30th) so if you are on the fence, act now!

You should be actively looking for a home at this point. Escrow process is averaging 45 days in our oroville market. You would need to have your property going into the escrow process around mid September, as you need to give yourself a little buffer for the whole loan process. This is assuming you are not trying to purchase a foreclosure or a short sale, as they are typically taking much longer just to get an accepted offer. The Oroville market is experiencing multiple offers on many of the lower priced properties. If your offer isnt accepted, this puts you back on the search for a new home!

So take advantage of this great opportunity!

Is there a difference between a Mortgage Pre-Qualification letter and a Mortgage Pre-Approval letter?  The answer is YES!

These terms appear to be similar, but are different.

Speaking as a REALTOR®, the difference is in documentation and verification. In other words, is the buyer providing copies of income pay stubs and bank account statements to the Lender or is the Lender simply relying on verbal information provided by the buyer?

 Mortgage Pre-Qualification is generally a process where a buyer contacts a Mortgage Lender/Mortgage Representative, often on the telephone, who then asks the buyer to provide some information. The information requested involves a current address and how long living there, a social security number and permission to order a credit report, annual income and hopefully the amount of down payment.

 After the credit check is ordered and received by the Mortgage Lender, the Mortgage Rep then estimates the amount of mortgage the buyer can afford and sends (via fax or email) a letter to the buyer with the title Congratulations, You Are Pre-Qualified, for a mortgage loan in the amount of $__ or Congratulations, You Are Pre-Qualified, for a mortgage loan in the amount of $__ and a purchase price of $__. This is usually done within a half hour or so of the initial phone call, and at best can be described as an estimate of potential mortgage ability and not Mortgage Pre-Approval.

Mortgage Pre-Approval,  in addition to obtaining a credit report, many Lenders require the buyer to provide proof of two years of work history, pay-stubs or income tax forms, copies of bank statements for source of funds verification and copies of charge card statements.

When the documentation is provided, it is then submitted to the Mortgage Underwriter for review and approval. The Mortgage Pre-Approval letter is worded something like this: Congratulations, You Are Pre-Approved for a mortgage loan in the amount of $__ and a purchase price of $__ subject to a Contract of Sale and a satisfactory Bank Appraisal on the home being purchased. While more time consuming than the previous pre-qualification practice discussed above, it is more thorough and more reliable, shortens the formal mortgage application and approval process and provides the ability for a fast closing if one is desired.

Mortgage Pre-Approval will give the buyer confidence in a price range and confidence in obtaining mortgage approval. In submitting offers, sellers will know they have a serious buyer who has taken the time to arrange for mortgage financing first.