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Q & A: Is a Mortgage Pre-Approval Helpful?
My husband and I are looking to purchase a home. We want to make sure that we aren't looking for homes that are out of our price range. How do we know what type of loan we will be approved for? How can we figure out the approximate loan amount?
It's probably best to get pre-approved. These days, buyers should have a pre-approval, whether they feel comfortable with the numbers they are looking at, or whether they are uncertain like you. Speaking to a mortgage professional will get you on the right track. He or she will take a look at your credit, examine your income and employment, assets you have to use for down payment, and closing costs, and advise you where you fall with regard to purchasing a property. It's also important the mortgage professional take a look at your information (pay stubs, bank statements, tax returns) to confirm that there's nothing showing up anywhere that could cause a hiccup in the process.
Some lenders also offer the ability to put a loan application together without an actual property in order to get you an underwritten pre-approval. This is the strongest item you can have as you go out looking for a home as it is basically a mortgage commitment. In that case you only need a contract and appraisal to close on a potential home.
Is there a benefit to holding a mortgage for the new buyer of my home. They were having trouble getting a mortgage from a bank. What are the pros and cons to holding a mortgage privately?
The biggest benefit, in looking at your question, is that you can sell your house, which is the ultimate goal here. There are, however, a number of things you need to be aware of when going into something like this. Why are they having a hard time getting a mortgage? The guidelines for getting a mortgage are definitely tight, so there may be a logical reason as to why they aren't getting the mortgage, but should be able to pay you back. It's important to find that out because you are going to be acting as the bank, and you do NOT want to potentially get involved with foreclosing on someone yourself, if the payments should stop.
Is there a benefit to holding a mortgage for the new buyer of my home. They were having trouble getting a mortgage from a bank. What are the pros and cons to holding a mortgage privately?
The biggest benefit, in looking at your question, is that you can sell your house, which is the ultimate goal here. There are, however, a number of things you need to be aware of when going into something like this. Why are they having a hard time getting a mortgage? The guidelines for getting a mortgage are definitely tight, so there may be a logical reason as to why they aren't getting the mortgage, but should be able to pay you back. It's important to find that out because you are going to be acting as the bank, and you do NOT want to potentially get involved with foreclosing on someone yourself, if the payments should stop.
The other thing that you need to be aware of is that you will not be getting all of the money from your sale upon closing. You are getting their down payment and then their monthly payments. The great news here is that you can charge interest, so you can potentially make more money on the sale of your house in the end. You obviously have to make sure you do not need all of the proceeds from your sale to buy a new home. You, as the seller, need to do your due diligence to make sure you are comfortable holding the loan.
Do you handle weekly rentals for the east end and waterfront? We normally rent on the Jersey Shore and are considering staying closer to home this year.
As far as weekly rentals go, they do happen, but are relatively rare. The smallest time frame that we typically deal with is a two-week period, because homeowners can generally rent out their properties for up to 14 days tax-free, so those two-week rentals generate the maximum amount of money without requiring property owners to pay any taxes on that income.
Dottie Herman is CEO of Douglas Elliman. If you have a real estate question for Dottie, please send it to: Reporters@WPCnews.com
Do you handle weekly rentals for the east end and waterfront? We normally rent on the Jersey Shore and are considering staying closer to home this year.
As far as weekly rentals go, they do happen, but are relatively rare. The smallest time frame that we typically deal with is a two-week period, because homeowners can generally rent out their properties for up to 14 days tax-free, so those two-week rentals generate the maximum amount of money without requiring property owners to pay any taxes on that income.
Dottie Herman is CEO of Douglas Elliman. If you have a real estate question for Dottie, please send it to: Reporters@WPCnews.com
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