Here’s Everything You Need To Know About Mortgage Pre-approval

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Even if you’re not in a competitive real estate market where you need to do everything to stand out, a mortgage pre-approval is your key to understanding your budget, help you speed up the process, and prove to the real estate world that you are serious about buying your dream home.

Here we’ve laid out everything you need to know about getting pre-approved, how long is your mortgage pre-approval good for, and what should you do if your pre-approval will soon come to an end. Heed these tips before even thinking of house-hunting so sellers will know you’re on top of your game!

Before starting your search, your first step should be to prove that you have the financial capability to purchase a home. In the pre-approval process, the lender reviews your loan application and your finances to determine whether you will qualify for a mortgage. They will have a preliminary examination of your credit, employment, income, assets, monthly debts, and other financial information.

Since the pre-approval letter will also indicate the actual loan amount you qualify for, you should use that as your guide when shopping for a home because your lender will only let you borrow up to that certain amount.

When you found a home you want, your real estate agent will submit the pre-approval letter together with your offer to the seller. This will prove to the seller that you are serious about buying and can obtain a mortgage.

Buying a house does take time. Your home search and loan approval process could go on for weeks, even months, before you could actually close the deal and get the keys to your home. If your journey to being a homeowner actually took a long cut, will your pre-approval letter still be valid by the time of your purchase?

While there is no definite duration for the validity of the mortgage pre-approval letter, in general, it is typically good for 60 to 90 days or about three months. Still, the actual time frame is indicated in your letter. So if you need a longer time frame, you have to ask for it beforehand.

However, many lenders and sellers may consider your letter too old after three months. Yes, making a decision as huge and remarkable as buying a home shouldn’t be put into such a short timeframe. However, your financial situation can change anytime within that three-month period. Lenders could have a hard time trusting you if your letter is more than a few months old because you could’ve done things that hurt your DTI and credit, like losing your job or buying a car. There is an expiration date to ensure the potential borrower has excellent DTI from the start until the end of his or her homebuying journey.

Also, the expiration date lenders placed on your pre-approval letter acts as a hastening mechanism so you can choose a home before the interest rate indicated in your letter goes up. It prevents you from taking a leisurely stroll through open houses for weeks and extending the buying process.

If your house-hunting journey is taking a bit longer than planned and your pre-approval letter is about to expire, you’ll likely need to renew it. However, there’s no need to go through all the trouble of applying all over again. Just take it back to your lender, together with your updated financial statements and pay stubs to show there’s been no change to your income, debts, or credit scores.

And since pre-approval letters are only valid for a certain period, it might be best to only get it when you’re already serious about looking for a home.

When you’re applying for a mortgage, having one or two checks on your credit report will indeed temporarily lower your credit score. It can lower your score for a few points, depending on your initial score and the number of payments you’re making, but it shouldn’t be significant. The problem comes when the hard checks or inquiries on your FICO score raise too many flags, which could get you disqualified from getting a loan.

If you don’t want the pre-approval process to cause any significant stress to your credit report, you can pull a soft report or a soft inquiry. Unlike hard checks, it won’t affect your credit score and you can use it as reference. Since soft inquiries are only visible to you, if you found out your score is lower than 620, it might be best to hold off purchasing a house for now and do the necessary steps to improve your score.

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Why Choose The Nelson Team?

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Ever wonder ???? what The Nelson Team does when it comes to selling a home? ???? Here is a sample of what we do for our clients to make sure they get the highest sales price ???? and are taken care of throughout the process! ???? #tntre #denverlivinghomes

Zeppelin Station & RiNo Art District

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The Nelson Team checks out the newly open Zeppelin Station in the heart of the fast growing RiNo Art District near downtown Denver. Located at the foot the new A-Line light rail station at 38th and Blake. Zeppelin station is home to a collection of innovative chefs, merchants, and creative companies.
 

Tips for a Better Home Appraisal

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If you’re buying a home or refinancing, an important part of the loan process is the home appraisal. The home appraisal determines the value of your home and plays a significant role in how much a lender is willing to lend you for your home financing. The Nelson Team is here to help with some key tips on how to get the most out of your home appraisal!

6 Home Design Trends of 2018

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Whether you are designing a new home or looking to renovate a room in your current house, The Nelson Team shares 6 home design trends to watch in 2018.

Making Your Renovation Count

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At some point in time, homeowners look to make improvements to their homes. Regardless of the reason, making smart decisions on what to renovate and when can not only make a home feel fresh and new, but increase the value and ability to sell. Watch the video and take a look at the additional information below to learn more about the costs of renovating and the life expectancy around the home. The handy infographics below were created by Glotech Repairs.

 

1. Kitchen Renovation

Kitchens are often referred to as the ‘heart of the home’. They are a gathering place for families and a place where a good amount of time is spent. When planning a kitchen renovation, think about the materials you would want for the next decade and if your budget doesn’t allow for certain materials today, think about placeholders. As an example, instead of installing a granite countertop right now, select a laminate that looks similar at half the cost until you can afford the upgrade.

Average Kitchen Renovation Costs – $20,000

Average Return on Investment – $18,000 or 87%

 

 

2. Window Replacement

Windows provide more functionality to a home than just letting in sunlight or allowing you to spy on the neighbors. During the winter, they can help hold in heat from the sun shining through. On the other hand, drafty windows can increase your energy bills by 10% to 25%, according to Energy.gov, Replacing old windows with new energy-efficient ones can reduce your heating and cooling bills and increase home value.

Average Window Replacement Costs – $15,000

Average Return on Investment – $11,000 or 72%

 

 

 

3. Bathroom Renovation

Even though bathrooms are usually among the smallest rooms throughout a home, fully renovating them is anything but a small task. In some instances, getting rid what’s there may require tearing out dusty plaster, concrete, and cast iron which might uncover any number of problems. And the design process during rebuild may have as many choices as redoing the kitchen. However, a newly renovated bathroom can help a home feel more luxurious and entice potential buyers. 

Average Bathroom Renovation Costs – $18,000

Average Return on Investment – $11,000 or 61%

 

 

4. Basement Renovation

Finishing a basement can significantly increase home value for owners and potential buyers. Unfinished basements are blank canvases, allowing freedom to add a bathroom, create recreation space or even an additional bedroom.

Average Basement Renovation Costs – $69,000

Average Return on Investment – $44,000 or 64%

 

 

5. Additional Renovations Around the Home

If you are starting a new renovation or searching for help with an existing project, reach out to us by contacting us above and we can guide you through the process. If we didn’t touch on the room in your home you are renovating, don’t worry, here are the additional graphics created by Glotech Repairs!

 

5 Tips to Prepare Your Home to Sell

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When buying or selling a home, there can often times be issues that are uncovered during the inspection process. In order to avoid surprises and insure your home is ready to sell, we recommend addressing five items that commonly cause home sales to fall through.

 

1. Have the Sewer Line Inspected

 

More often than not, homeowners neglect their sewer lines and are completely unaware of their condition. By hiring a licensed professional to inspect the lines, you can rest assured your sewer lines are free from any cracks, tree root intrusion, or other possible issues.

 

2. Check Your Roof for Damage

 

Along with sewer lines, your home’s roof is a big ticket item that buyers are concerned with. With hail storms in Colorado, it is always best to have your roof inspected for damage as soon as possible. Damage that is unattended to can lead to more severe issues and a more costly repair.

 

3. Inspect the Electrical Wiring Throughout Your Home

 

Newer homes typically don’t have issues with proper wiring, however, older homes built between the 1920’s and 1950’s may have older wiring that has yet to be updated. If this is the case, the wiring must be brought up to code in order to handle the higher voltage modern appliances.

 

4. Make Sure Your HVAC Systems Are in Good Condition

 

HVAC systems include your furnace, air conditioner, evaporative cooler, and water heater. Having these essential components inspected before selling your home will give you and potential buyers peace of mind knowing everything is in working order.

 

5. Test Your Home’s Radon Levels

 

Colorado has higher levels of radon gas than other parts of the country. If the levels in your home are high, installing a radon mitigation system will be required to ensure your safety and the safety of your buyers.

 

By having these five items inspected before selling your home, you can eliminate some of the headaches and surprises that popup throughout the process, give potential buyers better piece of mind, and you more negotiating power having taken care of these beforehand.

If you are currently preparing to sell your home or would just like to have these items inspected. Please reach out to us and ask for our recommended inspectors by contacting us above!

Choosing the Right Home

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Looking for the right home can be a daunting process for first time buyers and seasoned vets alike. From the style of the house to the type of appliances, there are countless factors that can go into such a big purchase. The following short checklist outlines the most important things you should think about when you’re on the hunt for a new home. 

1. Define your budget: 
It’s never fun to fall in love with a house that you can’t afford. Avoid the heartbreak by taking the time to analyze your financial situation before you begin the search. Start by reviewing your credit score, monitoring your debt and choosing an appropriate down payment. Meeting with a financial professional can help you get an accurate picture of your financial situation and the loans you are eligible for. 

Looking at your debt-to-income ratio is one of the ways that creditors establish how qualified you are for a mortgage loan. Your debt-to-income ratio is determined by taking your monthly debt (think current mortgage payments, student loans, car loans, etc.) and divide them by your gross monthly income. Ideally, you want to keep that ratio at 43% or lower. According to the Federal Consumer Finance Protection Bureau, “studies of mortgage loans suggest that borrowers with a higher debt-to-income ratio are more likely to run into trouble making monthly payments. The 43 percent debt-to-income ratio is important because, in most cases, that is the highest ratio a borrower can have and still get a Qualified Mortgage.” 

Don’t skip the down-payment analysis! A huge factor in getting the best mortgage rate relies on how much cash you are able to put down initially. The rule of thumb has been to put 20% down as a minimum. Anything below the 20% rule will usually require mortgage insurance and end up costing you more on the loan long term. Determining the right path for you will require you to analyze your own situation—your budget, timeframe and any other factors involved in figuring out your financial capacity to save and put money away for your new home. 

2. Your Must-Have List: 
Always search for homes that meet your “must-have” list. A must-have list encourages you to write out exactly what you need in a new home and will significantly aid in narrowing down the scope of your search, especially when searching with another person. This list will also foster communication on critical aspects of your new home that might not have been discussed previously, and help you identify requirements that may be in conflict with each other. 

Focus your list on the high-level, pricey aspects of a home. Minor changes such as painting and smaller renovation projects can be worked on down the road, but changes that add up in time and money should be avoided (think kitchen remodels or adding another bathroom). Narrowing down your search to homes that don’t require major changes will help ensure you choose a home that is within your budget. 

If you are struggling on where to start, think about what type of home you want to live in–Single Family or Townhome/Condo? How many bathrooms and bedrooms do you need? Do you want a fireplace or pool? What’s the minimum lot size you would be comfortable with and do you require a garage? What about air conditioning? 

Keep your list short and sweet–try to keep your must-haves on the shorter side by focusing on major requirements and ranking them by importance. Prioritizing your list will help when it comes to decision-making time, as selecting a home will often require some flexibility. Your list will provide you with an easy way to determine which aspects you can compromise on and which are red flags telling you to move on. 

Compromise can be hard, but don’t let small things completely take a home off of your short list. Remember, minor changes such as painting and smaller renovation projects can be worked on down the road, however, if there are a lot of these things the costs of those projects can add up. Focus on the minor modifications that you feel comfortable changing. 

3. Location, Location, Location! 
While the importance of location is often a no-brainer, the location of your potential new home serves multiple purposes. Location will impact your daily life and happiness as well as your home’s value down the road. 

When looking at location in terms of resell value, you want to look at a multitude of things: school districts, crime stats, and the neighborhood & community. A little research can answer most of these questions, and this website offers Market Insider, a tool to give you details on all these factors and more! Besides looking at the current stats and trends, take this information and think about what the value of the area might be in 5 or 10 years when you potentially could resell your home. 

Along with the resale value, analyze the location of a home from the perspective of your wellbeing and happiness. Things such as your daily commute, surrounding noise, and community will greatly shape your experience in the home. 

Along with this checklist, seeking guidance from a professional is always a good idea! A realtor like me can offer a wide array of skills and expertise, from the showing of a home to the endless paperwork. You can count on me to guide you through the process and assist in your home buying decisions. 

Finding the right home might not necessarily mean finding the “perfect” home, but rather, finding the right home for you to make your own. Hopefully this checklist provides you with a guide to start your journey towards the right home. When you’re ready to start looking, don’t hesitate to give me a call!

5 DIY Improvements to Make Your Home Classier

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Updating your home to be more chic – without looking cheap – is completely doable on a budget. 

If you’re looking to add more class to your home, taking on a DIY project can give your house that extra sense of style while saving you money. No need to cringe at those three little words: “do it yourself.” There really are fast, easy and affordable projects you can do on your own. Here are five relatively easy ways to enhance your home. 

1. Replace Your Light Fixtures
Switching out an old or basic light fixture for a more elegant one is an easy way to shift the ambiance of a room. By adding a sophisticated light fixture, you can control the intensity of the light and character of your room. And you don’t need to pay a pretty penny for expensive new fixtures – you can buy used fixtures online. 

2. Add Floating Shelves
Installing floating shelves in your home combines the functionality of extra storage space with a bit of style and personal flair. Floating shelves can be mounted on walls in many different patterns, and they come in various materials to give your rooms a unique touch. For a small room choose shallow shelves to display framed photos; for a larger room you can afford to use deeper shelves to hold vases, books and unique trinkets. 

3. Paint an Accent Wall
Painting an accent wall can add a pop of color and showcase your personality. Usually a low-risk project, a homeowner of any skill level can tackle this project in a day. You just need some painter’s tape, a brush and the color that suits you! Just make sure the color you choose is complementary with the other colors in the room. Stay consistent between warm and cool tones. 

4. Install Decorative Molding
Adding decorative molding around your home can add an extra touch of elegance. Install molding to the ceiling by capping walls, columns and cabinets, or add chair molding lower to the ground. With detailed molding you can add character to your rooms while also making them feel taller and more finished. 

5. Build a Stone Fire Pit

Take your sophisticated style outside by building a stone fire pit in your backyard. Completed in only a few hours, take uniquely shaped rocks or large stones and put them together to create a functional and stylish fire pit. Before starting the project, be sure to check your local fire codes or homeowners association to ensure you are safe and allowed to start building. 

Adding a touch of class to your home doesn’t have to break the bank! Just be sure to start with one project at a time, allowing yourself to complete one before starting the next. Otherwise, you’ll fall victim to chronic project incompleteness syndrome – not a good look! 

Now that you know about these five inexpensive DIY projects, which will you try?