Today I have my favorite mortgage company here with me, Motto Mortgage Simplified, and we are going to discuss the first thing you should do if you’re thinking about buying, and what the interest rates are currently doing.
The main reason I love Motto Mortgage Simplified is because they are local. If you have a problem with your loan, at any point during the process, you can actually walk in and talk to somebody.
Shannon: What is the first thing a buyer should do if they’re thinking about buying?
Lee: First, you need to get pre-approved.
Shannon: What’s the difference between a pre-approval letter and a pre-qualification letter?
Lee: A pre-approval involves getting the income documents, getting the asset documents, making sure they have enough income to pay for that house, making sure they have enough assets for the down payment, for the closing costs. So, we actually verify that information; whereas pre-qualified is just taking someone at their word.
Shannon: A seller wants to see that letter on the top say pre-approved NOT pre-qualified. How far in advance can somebody get pre-approved and it not hurt their credit score, or does it even hurt their credit score to get pre-approved?
Lee: Pulling your credit does not necessarily impact your credit score, but it’s a necessity to look at credit when you’re talking about pre-approvals.
Shannon: How long is a pre-approval letter good for?
Lee: Up to 90-120 days.
Shannon: Is there a credit score as a minimum that somebody needs to have in order to buy?
Lee: I’d say as a starting point, you need to have your credit score around 580+.
Shannon: What are interest rates doing right now?
Lee: Inflation is leveling off, so prices are actually getting better today. Last month they got better, as well, so we’re improving on credit scores right now.
Shannon: What is the 2/1 buydown program?
Lee: A seller can provide incentive or assistance to the buyer to make their house more attractive than the one next door. A buydown is where they offer funds to actually provide savings for the buyer. They can buy the rate down by 3%, 2%, or 1%. The longer you buy it down, the more it costs, but what that does is it buys it down the first year.
Shannon: It buys down the interest rate, so they can afford to buy the house. If they’re maybe expecting a pay increase over the next year, this helps them get to that point.
Shannon: Can a seller do the buydown program and closing costs?
Lee: Yes, they can! However, there are limits.
Shannon: That is just awesome! Thank you, Lee, for being here. If you ever have any questions, give me a call. My team and I are on standby 7 days a week, 9am to 8pm, ready to help you take the smoother road to sold!