Centre County, PA – Happy New Year Central Pennsylvania!  As I write this article 2015 is winding down.  If I had to pick a theme for our market over the past year it was the lack of housing inventory for sale which had the effect of pushing up average home prices, lowering average days on the market and keeping some buyers on the sidelines until they can find what they are looking for.  As 2016 progresses I’ll hope to use this column to bring you pertinent market insights as well as some tips about the buying and selling process, beginning with getting pre-qualified for a mortgage.

Going through the mortgage pre-qualification process before looking at houses can save buyers both time and heartache.

Many times buyers begin looking for a home, with no idea of how much they can afford to spend and how much they’ll qualify for.  The pre-qualification is based on information like income and existing debt. It’s a good place to start so buyers have a ballpark idea of what their buying power is. It helps them focus on the types of homes that are in their price range.

A pre-qualification is different than a pre-approval. A pre-approval is more detailed and will require additional information from the buyer. Buyers should make an appointment with a lender or mortgage broker and be prepared to provide much more detailed information about their financial situation. Also, the loan officer may pull a credit report at this time. Buyers should draft a budget that accounts for mortgage payments, potential mortgage rate changes, insurance, maintenance, and other expenses in their lives.

A pre-approval is a much better way of showing your likely ability to qualify for a mortgage but it’s still not a guarantee.  It’s important to understand that while the mortgage lender may give a pre-approval for a certain amount, other factors may affect how much you are ultimately eligible to borrow.

For example, if you have a change in employment status or there are defects in the property you’re considering, the lender may not be willing to lend the entire amount you qualify for.  In addition, large purchases during the mortgage application process can derail the approval process.

Pre-qualified buyers show home sellers that these buyers are able to purchase their property and help making an offer on a property go more smoothly. 

If you have questions about this or anything else involving residential or commercial real estate, contact a Realtor.  We are knowledgeable in the local market as well as the buying/selling process helping ensure our clients the information they need and ensure a smooth buying or selling process.  Put our expertise to work for you.

The Centre County Association of Realtors is the voice for real estate in Central Pennsylvania.